EU: Traffic Offences

Baroness Gardner of Parkes: asked Her Majesty's Government:
	In view of the European Commission's proposal for cross-border enforcement of traffic offences of European Union-registered cars, what action they propose to deal with cars registered in other countries.

Lord Bassam of Brighton: My Lords, we very much welcome the Commission's proposal for a common system of information exchange to facilitate the recovery of financial penalties for drink, speed, seatbelt and red-light offences from non-resident offenders. We are considering the practical issues involved in implementation.
	Provisions in the Road Safety Act 2006, when implemented, will also enable the police and Department for Transport officials to issue on-the-spot financial penalties to drivers of foreign-registered vehicles in the United Kingdom.

Baroness Gardner of Parkes: My Lords, I thank the Minister for that helpful reply. Is he aware of the problem—particularly in London, which has a large number of foreign-registered vehicles—of the unreadability of number plates by the automatic number plate recognition system? It cannot read plates in Cyrillic or Arabic and, in future, it will no doubt be unable to read Chinese. These drivers are escaping parking penalties and congestion charging simply because their number plates cannot be recognised.
	I understand that some countries propose issuing such people with temporary number plates on arrival—perhaps they have to put up a bond for that. I think that our Government have such proposals for lorries, but not for others. Can the Minister tell me the position?

Lord Bassam of Brighton: My Lords, the noble Baroness raises an interesting point about enforcement. All vehicles manufactured since 1 January 1973 must have a number plate made of reflecting material; that at the front must be white, that at the rear must be yellow and they must have black characters. We expect that for conformity. The typeface of number plates has to be substantially the same. If it is not, the police are entitled to investigate and to bring an offence. The issue is important and I accept that there is a problem. The police are aware of it and we need to deal with it. The noble Baroness's point about foreign countries issuing temporary plates is very useful.

Lord Bradshaw: My Lords, the Minister has frequently answered questions from me about foreign lorries and consistent breaches, particularly of the drivers' hours regulations, which are gross and very dangerous. When will the regulations come into force so that these people can be prosecuted? Will the penalties reflect the enormous advantage such hauliers are gaining over British hauliers?

Lord Bassam of Brighton: My Lords, on the implementation of the Commission's directive raised by the noble Baroness in her Question, we anticipate that we will resolve the issues and be able to do that at some time in the spring of 2009.

Lord Corbett of Castle Vale: My Lords, can my noble friend assure me that the safety checks on foreign lorries entering the United Kingdom are at least as strict as those for lorries which are domiciled here?

Lord Bassam of Brighton: My Lords, where checks are made by our enforcing officials, they will be to the same enforcement standard.

Lord Pearson of Rannoch: My Lords, can the noble Lord confirm that a new offence is to be added to the list of offences that he read out in the shape of a ban on our ordinary headlights and an insistence on the extremely nasty, glaring headlights used on the Continent? Is the noble Lord aware that the motor bike fraternity is worried about this new imposition from our masters in Brussels? How will it be enforced in this country?

Lord Bassam of Brighton: My Lords, I was a bit concerned when I realised that this Question would appear on the Order Paper on the same day as the European legislation, and I anticipated that we might have a Eurosceptic view on road traffic enforcement. It is important that we have high standards in this area. Is the noble Lord saying that we should not have those high standards? I am not sure where he is coming from in that regard. We would like a higher degree of cross-border conformity in Europe because that would make it much easier for us to enforce traffic regulations and laws and for us to push up standards on an international level.

Baroness Finlay of Llandaff: My Lords, how many fatal and serious accidents occur annually due to non-UK-registered vehicles of all types?

Lord Bassam of Brighton: My Lords, in 2006, the year for which I have statistics covering all accidents of varying severity, 2,398 involved foreign-registered vehicles.

Lord Trimble: My Lords, could the Minister turn his attention to the United Kingdom's only land frontier, where the issue of vehicles travelling across the border is particularly significant in terms of numbers? The Minister may be aware that some years ago there was a proposal to provide for the mutual enforcement of penalties—not only cash penalties but also points penalties—between the United Kingdom and the Republic of Ireland. Has that proposal been progressed?

Lord Bassam of Brighton: My Lords, progress has been made towards that objective. The noble Lord probably knows much better than I do that there is a disparity between the points system that we operate north of the border and that operated by the Irish Government. We are making progress, and I think that this will probably be the first area in which we achieve more effective joint working on cross-border issues.

Lord Lea of Crondall: My Lords, is my noble friend aware that there are enormous numbers of fraudulent plates on UK-registered vehicles and that there is no central collection of police information? Anecdotally, it is suggested that the figure is around 20 per cent. It might be useful to hold a pilot to show how many UK speeding and other offences cannot be prosecuted because the number plate is false.

Lord Bassam of Brighton: My Lords, my mind stretches back to the Vehicles (Crime) Act 2001 which I took through the House some years ago. The proposal embedded in that legislation sought to ensure that number plates are chipped, thus allowing them to be read in greater detail for the purposes of enforcement. Progress is being made towards that and the issue of fraudulent number plates should begin to diminish over time.

Earl Ferrers: My Lords, will the noble Lord address his mind to the question asked by my noble friend Lord Pearson? The Minister rather mobbed him up for asking a Eurosceptic question. I think that my noble friend asked whether it is true that our lorries will have to have different kinds of headlights in order to accommodate the laws in Europe. That is quite an important question, so can he answer it?

Lord Bassam of Brighton: My Lords, I am not aware that that is the case. However, the noble Lord, Lord Pearson, has raised a question about which I shall be more than happy to write to him.

Lord Roberts of Llandudno: My Lords, is there any procedure whereby foreign drivers, especially those from the now expanded European Union, are enabled to be aware of our traffic regulations and to read our road signs—in England and in Wales, which also has its problems?

Lord Bassam of Brighton: My Lords, I sometimes have difficulty with Welsh road signs, but I am sure that that is not a common problem on these Benches.

Finance: Inherited Estates

Lord Joffe: asked Her Majesty's Government:
	What steps they are taking to ensure a fair result for policyholders in the current negotiations over the reattribution of the inherited estates of with-profits funds.

Lord Davies of Oldham: My Lords, this is a matter for the independent regulator—the Financial Services Authority—and the courts. The Financial Services Authority sets the rules covering the management of with-profits funds. It requires firms pursuing reattributions to appoint an independent policyholder advocate to represent policyholders in negotiations with the firm. On completion of the negotiations, the FSA will assess the fairness of the deal and make public its conclusion on what fair treatment would require for consumers. Policyholders have a right to vote on the proposal.

Lord Joffe: My Lords, I thank the Minister for his reply, but the problem rests with the Financial Services Authority rules. My noble friend may not be aware that in the current negotiations relating to the reattribution of the inherited estate of the Norwich Union, amounting to £3.2 billion, both the policyholders' advocate and Which? have expressed concern about whether policyholders will get a fair deal under the FSA rules. Although the FSA—

Noble Lords: Question!

Lord Joffe: My Lords, are not the Government concerned that the effect of these rules will be that much of the 90 per cent of the inherited estate due to policyholders, as set out in the Government's published policy on inherited estates, will go to shareholders rather than policyholders? Will they put pressure on the FSA to ensure that the government policy of 90 per cent of the inherited estate to policyholders and 10 per cent to shareholders will be followed in reattributions?

Lord Davies of Oldham: My Lords, I am grateful to my noble friend for his question. There is a distinction between the distribution of surplus funds, which has followed and does follow the broad principle of 90 per cent to policyholders and 10 per cent to shareholders, and the issue of reattribution which arises in the Norwich Union case. This is because reattribution involves the buyout of policyholders and raises the issue of the company's necessary assets for the future as well as accumulated assets in the past; it raises different issues. That is why the FSA scrutinises these arrangements with great care, as I indicated in my Answer. Negotiations are still going on between Norwich Union and the policyholder advocate. We await the outcome of those negotiations.

Baroness Turner of Camden: My Lords, in view of what my noble friend Lord Joffe has said, could not the FSA be reminded that the purpose of a regulatory framework is to protect the consumer rather than, inevitably, always the insurer? There would be nothing wrong in reminding the FSA of that requirement.

Lord Davies of Oldham: My Lords, there is nothing ever wrong in reminding the FSA of its obligations. That occurs from time to time, in this House as elsewhere, but the FSA is well aware of its responsibilities. At present it is carrying out consultation on whether the costs of compensation for mis-selling claims should be included in the settlement for the shareholders. As the House will appreciate, the Treasury Select Committee in the other place, to which the FSA will be obliged to give evidence, is also looking at these issues.

Lord Elton: My Lords, have not successive Governments, including the present Government, said that the reallocation of this money should be in the proportions mentioned by the noble Lord, Lord Joffe? Have the insurers not overprovided with money that was taken from the policyholders? Surely they must have a prior claim.

Lord Davies of Oldham: My Lords, I emphasise again the distinction I sought to make in my Answer. Where bonuses are paid on surplus funds, the allocation is generally on the basis of 90 per cent to policyholders and 10 per cent to shareholders, a formula that the FSA has recommended. The difficulties occur on reallocation, when shareholders are buying out policyholders. In that context, not just the interests of existing policyholders but the future operations of the company have to be taken into account. That is why the formula there is bound to be different from the 90 per cent plus 10 per cent that obtains on straight surpluses.

Lord Oakeshott of Seagrove Bay: My Lords, I think we all accept that this is very complicated and that there is no single right or wrong answer. I am grateful to the noble Lord for setting out the legal position, if I can put it that way. The Question was really about the steps the Government are taking and what their view is. As and when the FSA gives its ruling, will the Government have a view and get involved or do they just say that it is entirely a matter for the FSA?

Lord Davies of Oldham: My Lords, I take solace from the fact that the noble Lord finds these issues difficult and complicated. I emphasise that the FSA is the statutory body concerned with this regulation. It has not had complaints about the distribution of surplus funds. There is no doubt that the issues on reattributions are more complex, but we have a clear framework for the FSA to work within. The policyholders will see the FSA judgment on the allocation that is made and they have the right to vote against the proposals if they find them unacceptable—they can even go to court. We recognise that there are difficulties in this area, but regulation means a regulator independent of government, and that is what the FSA is there for.

Lord Turnbull: My Lords, the Minister will be aware that we face the greatest turmoil in financial markets in many decades and that many banks are being urged to increase their capital. Does he not therefore share my puzzlement—I am a director of a life insurance company with a large inherited estate—that insurance companies are being urged to do precisely the opposite; that is, to distribute more capital than their directors think is prudent in these times?

Lord Davies of Oldham: My Lords, if surpluses accrue in insurance companies, it is expected that they will be distributed. Such surpluses are unlikely to accrue in difficult times and are more likely to do so in more beneficial economic times. Several companies have surpluses at present, which is why my noble friend asked his Question.

Climate Change Bill: Power Stations

The Lord Bishop of Liverpool: asked Her Majesty's Government:
	What will be the impact of the Climate Change Bill on the provisions affecting the building of power stations in the Planning Bill and the Energy Bill.

Lord Rooker: My Lords, the Climate Change Bill, together with the provisions of the energy and planning Bills, will give the United Kingdom a coherent legislative framework to ensure that policy is designed from the very outset to deliver our principal objectives; namely, to tackle climate change, to guarantee secure and affordable energy supplies and to ensure sustainable development.

The Lord Bishop of Liverpool: My Lords, I thank the Minister for his Answer. Will he explain why local authorities are required to consider climate change in relation to local developments, whereas there is no similar statutory obligation for the infrastructure planning commission to consider climate change when determining major infrastructure, especially nuclear power stations?

Lord Rooker: My Lords, I am in some difficulty. The Climate Change Bill has left this place; it has gone to the other place but has not yet started its journey. The other two Bills referred to have completed their Committee stage in the House of Commons; they await their Report stage. I am in no position to comment on the detail. They could be changed, and I have no doubt that the other two Bills will be bettered when they get to this place. But the fact is that the three Bills will be taken together. When the infrastructure planning commission is set up by the Planning Bill to deal with the large infrastructure and energy projects, particularly onshore generation of more than 50 megawatts and offshore generation of more than 100 megawatts, those projects will have to come under that commission, which will operate independently. It will have to take account of both climate change and sustainable development principles.

Lord Taylor of Holbeach: My Lords, how does the Minister square the decision to construct a coal-fired power station at Kingsnorth, with no carbon capture or sequestration, with the time that this House has spent on the Climate Change Bill?

Lord Rooker: My Lords, I am in the very happy position that I do not have to, because the application for that power station has been put on hold and deferred.

Lord Teverson: My Lords, is not the issue around the Climate Change Bill and power stations one of carbon capture and storage, as the noble Lord, Lord Taylor, suggested? In the UK, we have one minor-scale competition project for carbon capture and storage in an economy where we have the natural resources in the form of the North Sea, which is naturally ripe for carbon capture and storage. Will we not lose our leadership in this area, as we did in renewable energy, to the rest of the world, particularly to Australia and Canada?

Lord Rooker: Clauses in the Energy Bill, which is in the other place, set out the regulatory framework for carbon dioxide storage. All these issues—both the mechanics in the Energy Bill and the concept of and structure for regulation in the Planning Bill—can be fully debated in your Lordships' House, hour after hour and day after day, with the knowledge of what we have already done on the Climate Change Bill. It will not be too far away.

Lord Elton: My Lords, does the Minister recognise how agreeable it is for an opposition party to hear a Minister say that he has no idea what changes will be made to three programmed Bills?

Lord Rooker: My Lords, elected Members of the House of Commons will scrutinise the Planning Bill and the Energy Bill on Report, so who can say what the outcome will be when they come to this place? No one can. When both Bills come here, they will be scrutinised in line with our normal, high-quality scrutiny procedures.

Lord Redesdale: My Lords, will the Minister support all new power stations being made ready for carbon storage under the Energy Bill? Deferrals of applications should be made not just for coal-fired power stations, because we burn fossil fuels also out of gas. Every new gas power station should also have carbon storage and capture by law.

Lord Rooker: My Lords, I was warned that I might be asked that question, but, because of the deferral of that application, I was told that it made good sense not to make any comment. There is nothing on the agenda. There could be legal ramifications. That planning application is now deferred and on hold, so the issue does not arise.

Restaurants: Gratuities

Lord Lee of Trafford: asked Her Majesty's Government:
	What powers they and their agencies have to ensure that customer gratuities are received by staff rather than being retained in some form by restaurants.

Baroness Vadera: My Lords, restaurants, like any other business, operate a wide variety of practices in relation to tips. The Government do not regulate them in detail, with one exception: every employer must pay their workers the national minimum wage. Tips may count towards the minimum wage only when they have been paid through the employer's payroll.

Lord Lee of Trafford: My Lords, I am grateful to the Minister for her reply. Is it not clear that a minority of restaurants operate a dishonourable scam by retaining some of the gratuities or tips themselves or, in other cases, actually using the gratuities or tips to top up to the minimum wage? Will the Minister work with the British Hospitality Association to look at this whole question, which is clearly unsatisfactory at present? The association represents 18,000 restaurants. Would it not make sense if restaurants had to display on menus or bills what their policy is with regard to the distribution of gratuities or tips?

Baroness Vadera: My Lords, as the Secretary of State said yesterday, this issue is of concern not only with respect to employees' rights but with respect to the rights of consumers to know where their tips are going. The DBERR has therefore undertaken to consider the issue and take all representations into account. We will talk to the BHA as well as other stakeholders, including the unions and employers.
	I should simply caution that this is quite a complex matter. Tipping does not automatically lead to improved employee wages. In tight labour market conditions, the money does not need to be passed on, because wages can be reduced over time or consumers may stop paying the tips if the employers' costs go up. It is a complicated issue, but we will consider it.

Lord Elystan-Morgan: My Lords, is it not the situation in law that when these gratuities are received by the management they are held in trust, either for the individual waiter or waitress or for the staff as a whole, in accordance with any agreement made?

Baroness Vadera: My Lords, unfortunately, the law is not clear on that matter, which is why we have said that we will take all representations and consider it. Most restaurants are run on a troncing system in which a troncmaster holds the tips, usually for all the staff both in the front and the back. However, that does not mean that in all cases it is illegal for the tips to be shared by the owners or managers.

Lord Razzall: My Lords, does the Minister accept that, although certain aspects of the law may be unclear, following the very successful campaign by Unite to draw attention to this issue, if you go into a restaurant and it says on the bottom of your bill, "voluntary contribution to service", and if your voluntary contribution is in fact a contribution to the minimum wage salary of the member of staff, that is clearly a breach of contract? Is that not something that trading standards officers should be addressing and stopping?

Baroness Vadera: My Lords, the only regulation that actually applies to the disclosure of the service requirement is that customers are required to be told in advance that there will be a service charge if it is going to be automatically added on to the Bill. Restaurants do not currently have to disclose whether that is going to go to staff—and, in response to the Question asked by the noble Lord, Lord Lee, that is obviously something that needs to be considered.

Baroness Prosser: My Lords, I declare an interest as a member of the Unite trade union. Given that Her Majesty's Revenue and Customs takes into account a notional amount of money earned by way of tips by staff in restaurants and hotels, would the Minister agree that perhaps the best thing is to follow my personal practice, which is always to leave the tip in cash on the table?

Baroness Vadera: My Lords, naturally, I urge noble Lords to be generous in their tipping, but it must be said that it is not the case that every time you leave a tip in cash it automatically passes through to the waiters, because there could be a contractual arrangement that requires it to be passed back either directly to the employers or on through a troncing system. The Low Pay Commission has found a large variety of practices and it is not possible to say that one method is preferable to another.

Viscount Bledisloe: My Lords—

Lord Mackie of Benshie: My Lords—

Lord Renton of Mount Harry: My Lords—

Noble Lords: Cross Bench!

Baroness Ashton of Upholland: My Lords, we have not actually heard from the Conservative Benches.

Lord Renton of Mount Harry: My Lords, may I suggest to the noble Lord and the noble Baroness in her suggestion about leaving cash that there is an even simpler method of solving this problem? Noble Lords will probably remember that the French word for tip is pourboire. If noble Lords are worried about this matter, I suggest that they buy the waiter a large glass of red wine and leave that instead of money. The proprietor would get the message very quickly.

Baroness Vadera: My Lords, I am not sure that the waiter's family would entirely appreciate that if it is relying on the tips.

Lord Mackie of Benshie: My Lords—

Viscount Bledisloe: My Lords—

Baroness Ashton of Upholland: My Lords, we have already heard twice from the Liberal Democrat Benches and once from the Cross Benches, but if both noble Lords are reasonably speedy, both will get in.

Lord Mackie of Benshie: My Lords, will the Minister assure us that all the tips given in this House go to the staff?

Baroness Vadera: I am sorry, my Lords, but I do not know. I shall look to one of my colleagues and get the answer.

Viscount Bledisloe: My Lords, is it not plain that, if I leave money which is plainly intended as a tip and not as a payment to the restaurant and the restaurant takes it to itself, that is not just a breach of its contract with its waiters but is theft of the money and is prosecutable?

Baroness Vadera: My Lords, I completely appreciate the noble Viscount's view. However, the situation is not clear in law because the restaurant could take the service charge as part of its revenue, pass it on to the employee and pay NICs on it. In response to the earlier question, I understand that the answer is yes.

European Union (Amendment) Bill

Baroness Ashton of Upholland: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.
	House in Committee accordingly.
	[The LORD SPEAKER in the Chair.]
	Clause 1 [The Treaty of Lisbon]:
	[Amendment No. 1 had been withdrawn from the Marshalled List.]

Lord Howell of Guildford: moved Amendment No. 2:
	Clause 1, page 1, line 4, at end insert "which amends and alters constitutional arrangements between the European Union and the United Kingdom"

Lord Howell of Guildford: The amendment stands in my name and that of my noble friend Lord Hunt of Wirral. We now begin what I fear will be a fairly long process in a complex and very important Bill. I shall make one or two preliminary remarks about the future landscape. A lot of disagreement is ahead—we have to face that. We are here to disagree, I hope constructively and amiably, with each other. However, I hope that we are all agreed on one thing—that line-by-line scrutiny of this Bill is required urgently and, indeed, it is our duty to see how it can be improved. That is our job, and what we are here for.
	To be a little pedantic, it is not quite correct to say that the Government gave 11 full days in Committee in the other place, as was observed the other day. To put that at its kindest, I regard that as a somewhat digital enhancement of the facts. The truth is that with the themed debates in the other place, each day's Committee stage was squeezed down to three and a half hours or less, sometimes 90 minutes. As a result, rafts of amendments were never debated, and several very important subjects were never reached at all, such as defence, asylum and immigration, all of which led one commentator to describe the handling in another place as a scandal. I hope that we will not hear any more of that. We have an important job to do—to fill in for what has not been done.
	The first amendment is concerned with what could be described as honest labelling or consumer protection-type legislation—namely, presenting the treaty for what it really is. We believe that in the end it pays to be honest with voters and the public. If one tries to get round that it usually comes back to hit one in the face.
	I looked in vain—I suppose this was naïve of me—for a Liberal Democrat amendment on this issue. I am glad to see that Liberal Democrats are here. However, I have looked for their amendments but cannot see one to any part of this Bill at all. I am amazed that they have not put down a single amendment. They seem to have given up on their proper duty of scrutiny and improvement in this Chamber. I thought that was what they were here for. Therefore, I presume that they will vote with the Government on everything. I hope that I am wrong but it looks as if that is what will happen. It is very puzzling. These days our Liberal Democrat colleagues on my right seem to have become sort of punk Europhiles. They make Gordon Brown's dithering over signing the treaty and everything else look positively dynamic. I wondered why they abstained and walked out of the Commons. Frankly, I now wonder why they have even bothered to walk into the Lords today if they are not going to play any part in the Bill except to tick the Brussels boxes. Enough of that because it is disappointing but I suppose we—

Noble Lords: More!

Lord Howell of Guildford: I have plenty more here but I shall spare them that.
	Let us get to the amendment.

Lord Lea of Crondall: If the noble Lord wants to make points of that ilk, will he tell us what a Conservative Government would actually do, assuming this Bill goes through?

Lord Howell of Guildford: I certainly intend to do that during the Committee and Report stages of the Bill. We have plenty of things to do. We have a major agenda for improving the European system and for being extremely constructive and pro-European, as this party has always been, unlike the party of the noble Lord who has just intervened.
	In moving this amendment I confess that I have an overwhelming, almost eerie sense of having been here before. It is a sort of Groundhog Day experience. This is not surprising because the treaty embodied in the Bill we are looking at includes 96 per cent of the measures in the rejected constitutional treaty. Many of the amendments that we shall move will follow exactly the same track as those tabled by the Government at the time of the initial convention which gave birth to all this process. We shall seek to learn how and why they failed, as most of them did, and what damage the Government believe will be caused by their reappearance in this treaty. That is something to which the public are entitled to know the answers. I hope that we shall get very full explanations from the Government.
	It will be contended by some—and has been already—that an amendment of this sort is wrong because the last treaty was not really a proper constitution in the first place. I agree that it certainly was not the tight, limiting and circumscribing constitution that my noble friend Lord Lawson, who is not in his place, argued for on Second Reading, and for which I confess I argued myself some years ago in a book. In my view, which I stated even before the convention was set up, the whole idea of the convention, which was a top-down rather grand affair, was bound to be a disaster. One disaster leads to another so we are where we are now as a result of those errors.
	I know that the Government keep claiming that the constitution concept has been abandoned. That is their main claim although the argument comes in two parts. First, it is argued that while the measures are the same—that seems to be admitted—there is no bundling of all the previous treaties into one document, so it cannot be labelled a constitution or even of constitutional significance. No doubt we shall hear that again today. Secondly, it is argued that for the UK it is all different anyway because the opt-outs, safeguards and red lines make it so. Our amendment challenges both these contentions and seeks to ensure that the Bill states the truth from the outset. First, it is by no means necessary for all measures to be in one document for them to have deep constitutional significance and implications and to convey new constitutional arrangements, as our amendment suggests.
	As I said on Second Reading, every schoolchild knows that the unwritten British constitution exists outside the boundaries of one document and always has; and just because the wrapping has changed it does not mean that the contents have changed. In the words of Angela Merkel, the German Chancellor,
	"The substance of the constitution is preserved"—
	in the Lisbon treaty—
	"That is a fact".
	Secondly, the four main UK opt-outs that are supposed to make us different are almost exactly the same as those given last time when the referendum was promised. I will come to that in detail in a moment.
	Thirdly, when one examines the red line safeguards, and when independent examination is made of them, they turn out anyway to be pretty worthless; in fact "leaking like a sieve" was what the Commons EU Scrutiny Committee said. It went on to elaborate, as others have, first that the charter opt-out is not an opt-out at all it turns out, despite earlier assertions by the then Prime Minister that it was. The justice and home affairs opt-out and opt-in arrangements we are told could well be overridden by the European Court of Justice now that they have all been absorbed into the single pillar, which is a major change. In the foreign policy area, the Bill seeks to assert that foreign policy has been excluded from the treaty and that 11 vetoes have been removed. In social policy, there are new EU powers in the treaty to which the UK Government originally objected in vain and again which the ECJ could easily overrule in its judgments. We do not know how the ECJ will reach its judgments on these matters; we will have to see.
	To all of this, as well as to the remarkable self-amending powers, which we will come to, which are granted by the treaty to the European Union institutions, we will need to give the very closest attention in our amendments. That is certainly no argument at all for claiming that while the treaty may be constitutional for others, somehow when it comes to the UK it has been sanitised by the opt-outs.
	Meanwhile, the one point on which there seems to be general agreement is that the treaty is unintelligible; or as the Lords committee says in its report rather more politely, "inaccessible". Apparently, that is the intention. It is the main purpose that the import of this treaty should be disguised to prevent what happened to the last one. We take the view, and I quote the Economist, that trying to sneak through a constitution on the sly is highly unwise and does a disservice to Europe.
	Nevertheless, there are some people—some intrepid explorers—who have managed to hack their way through the jungle of convoluted phrases and impenetrable verbiage, including our highly expert Lords Constitution Committee, to which we are very grateful. When it comes at last through all the undergrowth to the clearings at the centre of it all, it finds that the treaty measures,
	"inevitably have constitutional implications".
	It goes on to quote with approval an expert witness, who speaks of,
	"fundamental constitutional change",
	inherent in the treaty. The committee urges amendments to the Bill to strengthen parliamentary accountability in the implementation of legislation via the treaty; amendments that it is entirely proper for us to make to the Bill, as we will seek to do. I am very sad that we will not have our Liberal Democrat supporters with us even in doing that, although I thought that they were in favour of increased parliamentary accountability.
	It cannot be right to present this treaty to the public as something different from what it really is. Almost the whole world knows perfectly well that it has major constitutional implications and, furthermore, that it contains the seeds of powerful further constitutional change via the famous passerelle articles, which, again, we will look at very closely. The Prime Minister says that there will be no more change or transfer of powers, but the President of France, Mr Sarkozy, who visited us the other day—a man of great seductive charm—is already proposing that work should begin on the EU's next round of integration. That can only mean more constitutional change, more powers to the centre and yet another move for Europe in the wrong direction, which will be taken presumably under either the self-amending provisions of this treaty or the next treaty, since Mr Sarkozy believes that this one leaves a great many issues completely unsettled. He is probably right.
	Party leaders are always talking about the need to restore trust in politicians and Parliament and to reconnect with the people. The people clearly want a say. The opinion polls make that absolutely certain and we shall be moving amendments on that precise matter. But as a first step, at least we have to tell the people what is truly in store for them, what is on offer and what is really inside the packaging of this treaty that purports to be so different from the previous one. We believe—

Lord Hannay of Chiswick: I thank the noble Lord for giving way, but can he answer a simple question for me? Why did the Government who he supported introduce the Single European Act and the Maastricht treaty, both of which contained many more far-reaching provisions than this treaty, without inserting the words of the amendment in the Bill brought before Parliament?

Lord Howell of Guildford: It is not actually a simple question. I would not expect a simple question from such a learned and authoritative source as the noble Lord, Lord Hannay. Why were these worries not as great then as they are now? It is a principle that the committee in the other place made very clear. It is a question of accumulation and a tipping point. As we advance with yet another 41 or 51 vetoes, or whatever the figure is, with yet another huge step towards integration, one reaches the point when it has gone too far. Those of us who love Europe—a sensible and modern Europe and not an overcentralised Europe—can see that point clearly in perhaps a way that the noble Lord cannot.
	That is why, at this stage, we perhaps need to take even fiercer and stronger steps to protect our parliamentary accountability than other countries which have their own constitutional courts—which we do not have. I do not know whether the noble Lord has grasped that point. If he has not, I suggest to him that we need very strong accountability in our Parliament, because we do not have the constitutional court back-up that is available in France, Germany, Spain, Hungary, the Czech Republic, Italy or any other European member state. I think that that answers the noble Lord's question and I hope he will be convinced by what I say.
	We will of course be moving amendments on all these matters, but, as I was saying, it is necessary to state clearly on the packaging what is inside the parcel. We believe that it is proper, transparent and honest to state openly in the Bill the real nature of this treaty. Accordingly, we urge that these amending words now be added. I beg to move.

Lord Owen: I support the amendment. It does not matter, I suppose, if it is not put in the Bill, but its intention and the clarification that it incurs seems pretty important to me. One of the more distasteful aspects of this debate has been the pretence that we are not dealing with constitutional points.
	I shall deal with the point raised by my noble friend Lord Hannay. There is no question that the treaty of Maastricht was a constitutional treaty that was put to the people of this country in the general election of 1992 by the then Prime Minister, John Major. He won the election and that greatly reduced the case for a referendum, although I believed that, because so much division of opinion remained, it would have been beneficial to have had a referendum. The European Union amendment Act, which brought in the single market, was also constitutional, although less so than the Maastricht treaty. I believe that the Maastricht treaty was extremely important and good. Its pillared structure tried to introduce a much needed clarification of the separation of powers exercised predominantly by the Commission and the Parliament.
	The supranational elements should be defined as such and we have to accept that that is an aspect of the European Union, of which we are a member. There is a supranational element within it, and that has always been controversial. It was hotly debated in the House of Commons, of which I was a Member when the original treaty went through. I believed that some measure of pooling of sovereignty was a reasonable part of the European commitment and I have never changed from that view.
	The question, which was becoming more clouded prior to Maastricht, was: was any element specifically not supranational? The great benefit of the pillared structure was that it defined those elements that were not supranational and were the province of the member states. They included foreign policy, defence policy and some aspects of the judicial process. In my view, it would have been much better to maintain that separation in the current negotiations, and I believe that it was a triumph for those who want all aspects of European activity to be supranational to have got rid of the pillared structure and to have, in effect, no great distinction. That is one reason why I believe that this treaty should never have been negotiated in the first place.
	However, it can be claimed by the Government that in the past year, when there was an attempt to renegotiate the treaty, that was the one area where significant improvements were made. I pay tribute to the legal advice given to the Government during that period and to the determination to try to improve the treaty. Of course, we were greatly helped by the fact that the French and Dutch knew perfectly well that there was no possibility of avoiding a referendum unless there was more clarification. The way in which the treaty was drafted and the reversion to an amendment Bill have led to some considerable improvements in defining foreign and defence policy as being between the nation states—the signatories to the treaty—and not supranational. However, other aspects are not fully clarified.
	Whatever else, and as I have already indicated, the Government can claim great success in doing that, and no doubt we shall hear that that is the case. That only goes to demonstrate that this is a constitutional Bill. The Government have to grapple, first, with the decision to get rid of the pillared structure of the Maastricht treaty, which is itself a fundamental constitutional question, and then, post-Giscard d'Estaing, they have to try to restore some of the structures of Maastricht but in a different way through amendment. Therefore, as I said, I cannot possibly argue that this is not constitutional.
	The other argument has been used very effectively in another place—perhaps not in the Parliament but certainly in the country. When the former Foreign Secretary, Jack Straw, argued for a referendum, he made it clear that this was a constitutional Bill because it created a new post—that of the European president of the Council. He also mentioned the double-hatting, with the special representative for foreign affairs becoming also a vice-president of the Commission. These are deeply constitutional questions. If you have previously argued that the special representative for common foreign and security policy, Javier Solana, who in my view has done the job with incomparable skill and demonstrated that we needed that post, should also be made a vice-president of the Commission, you blur the distinction between foreign policy being for the member states and a member of the Commission being supranational. I shall not go into the arguments for or against it now. There are arguments for it and it tidies up some aspects, but its fundamental weakness is that it blurs that distinction. Nevertheless, it is a constitutional question.
	The new role of President of the European Council is fundamentally a constitutional question. Hitherto, presidents of the European Council—a council of Heads of Government—have been composed entirely of people who are themselves members of the Council; they are heads of the European states, elected and answerable to their electorates. We now have a completely new position. We can, and no doubt will, argue at various stages whether it is right or wrong, but this is a constitutional matter. In my view, it is profoundly wrong. We always knew that the six-month rotation would have to change once the Community was composed of many more than 12 member states. Very few people will deny that you cannot have the President of the European Council changing every six months. However, alternatives were put forward such as the grouping of member states, which already exists. Such groupings could be much more formalised, with the largest state within a grouping holding the presidency of the European Council for 18 months or two years, which many of us would think was sufficient time for anyone to be president of the Council.
	Those are matters of argument but who can deny that they are constitutional? It is impossible for the Government to change their minds about this because, in my view, in order to win this argument about a referendum, they rather foolishly jumped on the argument that this is not a constitutional Bill. They would carry more conviction in this House if they openly admitted that it is constitutional but that its nature as a constitutional Bill does not pass the threshold of importance for a referendum. There is a case for that. We have had some amendment Bills on the constitution which have not been of massive importance and about which most of us would have said, in a flexible structure of referendums, that we did not need a referendum.
	Personally, I have always been apprehensive about adopting the practice used in the Irish Republic of automatically needing to have a referendum however small the constitutional amendment may be. I am beginning to realise why the Irish legislature and the Dáil, in their wisdom, decided on that: it is the only way in which one can cope with a Government's capacity to argue that black is white and white is black. In this House, I, along with the noble Lords, Lord Healey and Lord Prior, once proposed an amendment, trying to make a distinction for a referendum between constitutional matters and non-constitutional matters. I admit that it was quite hard to do and one had to put in an arbiter, and the only one we could think of was the Speaker of the House of Commons, who does not always like that position but prefers matters to be dealt with by the usual channels.
	When we have a Government who insist that major constitutional matters in the European Union are automatically matters for referendum, they will have to define what is a constitutional Bill or they will simply need to have a referendum for every amendment, which is not a desirable course, as I say. I shall delay the Committee no further. It seems to me to put logic on its head to argue that this is not a constitutional Bill. You can argue that it is a very desirable constitutional Bill; you can argue that it is not a major constitutional change; but to argue that it has no constitutional elements in it seems to me to be quite unsustainable.

Lord Lester of Herne Hill: I do not know whether the noble Lord, Lord Owen, is an enthusiast, as I am, for the political novels of Anthony Trollope, but if he is, he will remember that there was constant reference by parliamentarians throughout the last part of the 19th century for what they called Constitutional Questions, and the Radicals, Liberals and Conservatives argued back and forth whether something was or was not a constitutional question; it could have been 1880, although it is now 2008. I do not think there is any value in spending a lot of time on that question.
	There would be value if we had a written constitution and if, as the noble Lord, Lord Howell, seems to wish, we had a constitutional court that had to decide whether something was or was not a constitutional question. We do not have that. We have a rubbery, elusive, unwritten constitution with all the benefits and burdens that that creates. If one were serious in seeking to answer the question posed by the noble Lord, Lord Hannay, the answer would not be that of Karl Marx given by the noble Lord, Lord Howell, that a change of quantity brings about a change in quality—dialectical materialism. I was pleased to hear that the Conservative Benches had become Marxist. That is not the right answer. The right answer is that in truth the constitutional arrangements between this country and the European Union were profoundly altered when we joined the Community, when the noble and learned Lord, Lord Howe of Aberavon—I am not sure whether he is in his place—

Noble Lords: He is here.

Lord Lester of Herne Hill: The noble and learned Lord and Edward Heath performed a masterly exercise in their short Bill in profoundly altering the constitutional relationship. Other pieces of legislation have done so. Whenever we enter into a treaty—not just a treaty under the European Union—we alter what could be called constitutional relationships.
	I had the pleasure and burden of having to read the whole treaty in this case as a member of Sub-Committee E of the Select Committee on the European Union. I am bound to say that compared with previous treaties, including Maastricht and our original adherence, this is an important one but I would not dream of attaching the term "constitutional importance" to it, making it more important to our arrangements than all the other treaties to which we have adhered as members of the European Community.
	The real questions, as I think the noble Lord, Lord Owen, indicated, are not formalistic ones about whether a Bill is constitutional or whether a treaty is right for us to join. It is the merits that matter, and I would find it extraordinary if Parliament were to decide to write into this Bill for this treaty the words in the amendment, which could apply to a great string of Bills implementing international treaties over the past 40 years. The question posed by the noble Lord, Lord Hannay, is the right one, and the answer given by the noble Lord, Lord Howell, is not the proper answer.

Lord Campbell of Alloway: I would not have intervened but for the fact that the noble Lord, Lord Hannay, intervened. With respect, I do not agree for a moment that his question was the right one. First, we need only listen to what the noble Lord, Lord Owen, just said. Secondly, we have to take into account the fact that this is a self-amending treaty, which traduces the sovereign interests and entitlements of this country. Thirdly—and I shall be brief, as I had not intended to speak, as I said—the assertion from the Liberal Benches that what the noble Lord, Lord Hannay, said, is justified is totally misconceived.
	I was involved at a very early stage at Messina—long before many of your Lordships because I am so old—where there was a fundamental disagreement. There were two prisoners of war there; I was interested in the issue because I was a prisoner of war, and we did not want any more wars in Europe. That was the fundamental basis of what we determined to do, and I have lost faith in what is happening now. There is a totally different objective; we are a large group of 37 states, bordering on the former Soviet Union, creating problems that we cannot resolve with it or, indeed, with China, which could be better resolved by ordinary diplomacy.
	As my noble friend Lord Howell said some time ago, we are moving in the wrong direction and we have to watch it. The fundamental distinction has never been resolved, not at Messina, not at Maastricht and not with ever-closer union, not until we ratify this treaty. We have never accepted a federalist administration. We stood against it. We would not have gone into it with one. I know that from my little experience. So what happened? At Messina, they decided that they could not resolve it and so would leave it out of the Rome treaty, and they did. There it was. A court of justice was set up and left to resolve it, and my word, it did. It inevitably went for it with a federalist approach, unlike our approach of retaining our own sovereignty—incidentally, that was de Gaulle's approach too.
	I shall not go on any more. Here we are today. This has not yet been resolved. I do not want it resolved against the interests of the sovereignty of my country and therefore, as matters stand, unless we can come to some accommodation, I am not happy with the treaty.

Lord Stoddart of Swindon: The noble Lord, Lord Lester, is absolutely right. The European Communities Act 1972 fundamentally altered relations in this country and this country's constitution. That is why some of us who were against that treaty spoke and voted against it and have been against any further erosion, if I can put it that way, of British sovereignty through the various treaties that have been passed by this House and another place over the years. The country and Parliament were undoubtedly misled by the idea that we were simply joining a common market. They should not have been; anybody who read the treaty of Rome, as the noble Lord, Lord Lester, has, realised that that was the start of a great journey that was bound to end in a federal European state. There is no question about that in my mind, and that is why I have remained an opponent of our membership of the Common Market, which has now become the European Union. I believe in the unity, freedom and nationhood of the United Kingdom, and I believe that that cannot be maintained as long as we are in the European Union.
	However, we are not discussing staying in or going out, we are talking about this treaty. We talk about democracy in this country; indeed, we lecture other people about it, but democracy is not about having elections every five years or about putting something in a manifesto and then saying things have changed, although they have not changed, so we do not need to implement that part of the manifesto. I am talking about the promise in the manifesto of each major party that there would be a referendum on the constitutional treaty. The Government say, "It is not the constitutional treaty", although some of us have read the Lisbon treaty and the constitutional treaty and took part in the debates on the constitutional treaty in the Joint Committee set up between both Houses of Parliament. We know that the constitution has been transferred to the Lisbon treaty.
	The Government are making a big mistake—no doubt we will come to this later in our debates—in not going for a referendum. If they are confident in their policy, if they are confident in what they say about the Lisbon treaty, if they are confident in the role that they are taking, they ought to have the courage to go to the people to say, "Look here, we are at an important point of our progress within the European Union. Now we want you to have a say". That is real democracy; it is not trying to get round a promise that you have made in a manifesto which you are frightened that you may not be able to keep if the people say you cannot do it. The question of democracy must be put in its proper context. I fear that the Government's failure—and the failure of the Liberal Democrats to deliver on a manifesto promise—will not do them any good.
	Let me emphasise the changes that the treaty will make. They are fundamental changes, as the noble Lord, Lord Owen, pointed out. For example, there is the permanent or semi-permanent presidency. It was never envisaged in 1972 that we would have a president of Europe, but that is what this fundamental change will mean. When the previous Prime Minister, Mr Blair, was discussing that issue he said quite firmly that the president of Europe would speak for Europe on the world stage—not individual Prime Ministers or heads of state but the president of the European Union. He foresaw that the presidency was going to be a very important job and would set the debate in Europe, set the agenda in Europe and talk for Europe on the world stage. I am quite sure that the people of this country do not want that—80 per cent of them want a referendum, but they are not going to have one.
	The other great change in this treaty is the establishment of Europe as a single entity, giving it a single personality. People say, "That does not really matter", but it does, because it will enable the European Union in its own right to make treaties with other countries without let or hindrance from the nation states, which will not have to ratify such treaties. That is another important change.
	There is also the question of a Foreign Secretary. There is no doubt about the intention—indeed, the treaty lays down the importance given to that office. We in this country believe that the Foreign Secretary and the Government carry out Her Majesty's foreign policy. Once this treaty is put into operation, we will have not Her Majesty's foreign policy but his presidency's foreign policy. That, again, is a fundamental and important change, which will not be welcome once it is seen in practice.
	There are many other aspects, but we will come to those shortly. I hope that the Committee will have a full, frank and reasonable discussion. In the mean time, I support the amendment.

Lord Wallace of Saltaire: I concede that we are at the warm-up stage of the Committee and that we will perhaps move with slightly greater speed on amendments on our second and third days than we are at the moment. I note that the noble Lord, Lord Howell, promised us line-by-line scrutiny of the Bill, but so far I have heard only a number of familiar arguments about Europe, Britain, national identity and sovereignty and not line-by-line scrutiny. As a veteran of the debates on the ratification of the Amsterdam and Nice treaties, I must say that these arguments are very familiar, although I regret that this time we will not have the 25-minute speeches that the noble Lord, Lord Shore, used to make on these occasions in the middle of Committee.
	We do not need line-by-line scrutiny of the Bill. Well over 100 Members of your Lordships' House have already given the treaty detailed line-by-line scrutiny in our committees. Many of us have waded through these massive reports from different committees that we have had. That is the sort of scrutiny that we need and to which we should return in Committee. Scrutiny is, however, also an ongoing process, and the Chamber and its committees should continue to do it. We must be very careful about claiming that Members on our Benches are speaking the truth and that others are not: that we are presenting the truth, if I may quote the noble Lord, Lord Howell, for what it really is. That takes us down all sorts of conspiratorial roads in deciding who is not speaking the truth and who is really identifying the underlying issues. These are charades familiar to many of us from previous ratification debates.
	The British constitution is famous for its flexibility, its pragmatism and its ability to adapt to different circumstances. That is also true of Britain's foreign policy and our participation in international institutions. Those who cling to a wish that the world would stand still form part of the bedrock of those who vote for the UK Independence Party. I well remember during the last election campaign a BBC interview with a woman who said that she had just voted for UKIP because, "I would like England to be the way it was 40 years ago". Many of us would like that, although we would like to have today's income in the England that was 40 years ago, but the world changes and our unwritten constitution adapts. When I listen to the noble Lord, Lord Howell, and others on his Benches, I am also reminded a little of Trollope in the 19th century. For the Conservatives and unionists, the EU is the equivalent of the Irish question in the late 19th century. It is the one they stub their toes on all the time. They cannot come to terms with it, and they grapple with it as a constitutional issue. However, all international treaties limit national sovereignty. Membership of the United Nations limits British sovereignty.

Lord Pearson of Rannoch: The noble Lord has left his less than flattering allusion to the UK Independence Party, of which I have the honour to form part. When he refers to the change in the British constitution, does he not understand that the fundamental element of the British people is that they should elect and dismiss those who make their laws? I should be grateful if the noble Lord would answer that. Or has he abandoned that element in his great, brave new world?
	Does he not realise that leaving the European Union would be immensely advantageous to us not only constitutionally but economically? Unless he addresses those problems, which are the questions of the future, and if he goes on dwelling in the past, he will not advance his case.

Lord Wallace of Saltaire: I should have congratulated the noble Lord, Lord Pearson of Rannoch, on the new addition to his party in the House of Commons. I hope that it is not the last from the Conservative Benches. I realise that the overlap in the Conservative Party and the UK Independence Party is a matter of great delicacy which we will see many on the Conservative Benches struggling with as we deal with the Bill.
	I do not agree with him about the absolute defence of British sovereignty. When I was a history student, I read through some of the debates on the Irish question in the late 19th century. For the unionists, the sovereignty of the Westminster Parliament was absolutely inalienable. One could not allow Dublin, let alone Edinburgh, to have its own Parliament, because that would somehow destroy the essence of what was the United Kingdom, which of course was about English supremacy.
	The noble Lord should also have noted that David Cameron, the leader of the Conservative Party, in a rather good speech on the North Atlantic Treaty Organisation at Chatham House two weeks ago, proposed common funding for NATO defence—a common budget for defence operations which would be a huge loss of British sovereignty. In that respect David Cameron recognises that we are in a different world from 50 years ago, let alone 100 years ago. The leader of the Conservative Party recognises such a pooling of sovereignty as worth while at least in the Atlantic context, even if in the European context he still stubs his toe on those who do not speak English, who are therefore not trustworthy.
	We have US bases on British soil, and they are an immense invasion of British sovereignty. I passed RAF Menwith Hill at sundown two weeks ago and stopped to watch US soldiers taking down the RAF flag that marks the British presence there. There were no British soldiers present although there were one or two MoD police outside. It is a huge incursion of British sovereignty which most of us recognise to be worth while for our security.
	The right-wing conservatives in the United States, with whom some on the Conservative Benches are highly familiar, believe that American defence of sovereignty is indeed absolute. Justice Scalia of the US Supreme Court and others argue that the United States cannot accept that international law overrides American domestic law. I do not think that we in this country wish to accept that; we accept that, in a changing world, international law has to limit domestic law. So we are talking about a number of international obligations—of which the European Union is the most extensive—of a political character.
	I should like to remind the Committee of what Sir Alec Douglas Home said in June 1971 when opening the debate on Britain's application to join the European Community. I say to the noble Lord, Lord Stoddart—since one of the great myths is that no one told us what we were going into—that Sir Alec, in his first sentence, said that the first thing he wished to say was that,
	"our application is a step of the utmost political significance ... I don't think that it is true to suggest that the political case has been allowed to go by default or that the political implications have been suppressed".
	He went on to talk about the desirability of co-operation in foreign policy. He said that,
	"it is inevitable, and I use that word advisedly, that Western Europe will begin to carry more of the burden of its own defence".
	In 1971, he was clearly talking about foreign policy and defence co-operation as part of the implications of joining the European Community. He ended by saying:
	"Perhaps my real fear for this country at this moment is that we are in danger of getting out of date in our thinking".
	That could be a motto for the UK Independence Party, but not, I hope, for most of the remaining speeches in this Committee stage.

Lord Forsyth of Drumlean: I have to say to the noble Lord, Lord Wallace of Saltaire, that his plea for proper line-by-line scrutiny of the Bill would carry a bit more weight if there was a single Liberal amendment on the Marshalled List. There are no Liberal amendments. I find that very surprising as his party made a great play in the other place of tabling an amendment for a referendum on a slightly different question—which, of course, under the rules of this House would be perfectly in order. I dare say that the scrutiny to which the Bill will be subject certainly on these Benches will prove to be excruciatingly embarrassing for him and his party.
	The noble Lord, Lord Lester, talked in his speech about how he was mystified as to why there was so much interest in the use of the word "constitution", because we do not have a constitutional court. He told us that he had read the treaty as part of his duties in this House—we all sympathise with him, and no one more than Giscard d'Estaing, who has described how impenetrable the treaty is—and said that he could not understand why so much emphasis has been put on the use of the word "constitution". I suggest that he read page 13 of the Liberal Party's 2005 manifesto, which states:
	"We are therefore clear in our support for the constitution which we believe is in Britain's interest—but ratification must be subject to a referendum of the British people".
	My noble friend's amendment, which I support, will not be supported by the Liberal and the Labour Benches, despite the fact that what it says is blindingly obvious. They are opposed to it because it draws attention to the embarrassment that they carry, having told a lie to the British people during the general election campaign when they promised a referendum on this treaty. That is why the words which my noble friend wishes to add to the Bill are so important. They remind people that a promise was made and a promise has been broken.
	It is the deceit that is central to the handling of this Bill, a deceit which was underlined in the debate on Second Reading. I usually enjoy the speeches of the Leader of the Liberal Party in this House. However, when he said that the Liberals had changed their position on these matters—from one of promising a referendum, to one of abstention, to one of being determined to vote in this House against a referendum—he gave as one of the explanations that the arithmetic in this House is different from that in the House of Commons. That a party should decide its policy on arithmetic, having given a solemn pledge to the British people, is quite extraordinary. So this amendment is important. It draws attention to the blindingly obvious, and it is something for which two parties in this House will have to account to the electorate in due course.

Lord Lester of Herne Hill: I am grateful to the noble Lord for allowing me to intervene, and for his reference to me. Would he accept that one of the differences between this House and the other place is that we in this House are capable of transcending narrow party advantage and looking at issues more freely? Would he also accept that none of the main parties has covered itself in glory when it comes to the questions he has raised—not his own, my own or the government party? What we need to do is not hurl abuse at each other about deceit, being misleading and matters of that kind, but actually look at the merits of what we are discussing.

Lord Forsyth of Drumlean: I would be more persuaded by the noble Lord's suggestion that we transcend party advantage if his party had not stood its position on this matter on its head in the House of Lords compared with the position adopted by his party in the House of Commons. A number of the elected Members of the Liberal party in the House of Commons were sacked by the Leader of the Liberal party for abstaining on the Bill, and in this House the unelected Members on the Liberal Benches have decided to take a completely different position. I have considerable respect for the noble Lord, not least for his intellectual abilities, but for him to try to make the argument that his colleagues on those Benches are transcending party politics is the height of absurdity. Clearly they are playing party politics. They are rescuing the Government from the defeat they would suffer on the referendum question were his party to maintain its position.
	The noble Lord raised the issue of the role of this House. What is the role of this House? If this House is not able to stand up for the promises that were made to the electorate by almost every single Member of Parliament standing for election and insist on a referendum, people will begin to question what exactly this House is for. The noble Lord and his colleagues will have played a major part in bringing the House into disrepute by the way in which they are playing party politics and denying the people the right to speak on these matters as they were promised. Governments can govern only by consent.
	I am not a committed Euro-federalist. I believe that we should be in the European Union, and I want the European Union to work. One of the ways in which Governments have to operate is by consent. By forcing political structures on the people without consent, they will destroy the very institutions they support. It is not anti-European to insist on the people having a say; it is pro-European. It is in the interests of Europe that this should be seen to carry consent. The reason noble Lords on the Liberal Democrat Benches are denying the promise which their elected colleagues made to the voters is that they know that if there were a referendum, they would lose it very substantially.
	That is the difficulty. It has been compounded by the attitude that has been displayed, and I have pages and pages of quotes from leading Europeans. I have mentioned Valery Giscard d'Estaing. In a letter to Le Monde on 27 October—it has been quoted a number of times but we should keep it in mind—he said that the new treaty is designed to avoid having a referendum thanks to the fact that the articles are spread out and constitutional vocabulary has been removed. There is that word "constitutional" again.
	The reason why the noble Lord, Lord Lester, is puzzled and why the noble Lord, Lord Hannay, asks why the amendment is not appended to our Bills is that it is central to the whole debate about whether this new European institution will carry the consent, and be seen to carry the consent, of those who are affected by it. The amendment, though strikingly bland, is therefore necessary. In any other circumstances both the Government and the Liberal Democrat Benches would accept it.
	They refuse to accept it because of deceit. That is not a party political point. It is a deceit to tell people in a general election campaign—in order to get elected, to get on the red and the green Benches—not to worry about the European constitution, that it is not an issue for the campaign and they will have an opportunity to discuss it properly later, but then to turn round and say, "We are withdrawing that opportunity".

Lord Tomlinson: I had not really intended to intervene in this debate; I thought that it was going to be a rather cathartic experience for Eurosceptics opposite and I would just sit and listen. But I have listened with great interest to a number of the contributions, in particular that of the noble Lord, Lord Forsyth, who has just sat down. He appeals to us that he is really one of those Tories who is a good European and that he wants to be in Europe. But everything he then said showed that he wants to be a good European and in Europe providing that the other 26 countries of the Union change their opinion of what the Union is and bend their will to his. That is not pro-Europeanism. It is an individual sort of arrogance: "We are the people who will tell Europe how to run its affairs and what it ought to do. If they were really good Europeans they would all change their minds and join in with our rather eccentric, limited view of what Conservative Europeanism is".
	Earlier we heard from the noble Lord, Lord Stoddart. He took us for a wander down memory lane, through 1972 and the circumstances leading up to the 1975 referendum. That referendum is deeply ingrained upon my memory; I felt we were being dragged along by our own Eurosceptics in the Labour Party, and we had a fix of a referendum. That was not in order to paper over fundamental constitutional issues—there was no such issue to sort out—but to patch over the divisions inside the party and stay in power for the rest of the 1970s. That is what it was all about.
	My own recollection of that referendum was of even more concern to me. I approached the parliamentary bookmaker in the House of Commons, Mr Ian Mikardo, and asked him what odds he would give me on getting a yes vote in every constituency in the United Kingdom. He offered me 200-1, on which I had £10 with him. My big regret was not the fact that we won the referendum, but that those marginal parts of the United Kingdom, stuck there in the Western Isles and Orkney and Shetland, cost me the £2,000 from Mikardo. That indicates that we got a yes vote in every constituency in England, Wales and mainland Scotland; those two island constituencies were the only part of the United Kingdom that let us down.
	The David Stoddarts of this world, and the people who were leading the campaign to destroy our European engagement, were promising that the referendum would resolve the issue for all time. So far as I am concerned, in my party that issue is resolved.

Lord Stoddart of Swindon: It was not only the David Stoddarts of this world but also the Neil Kinnocks who had that point of view at that time.

Lord Tomlinson: I am sure we all recognise that my noble friend Lord Kinnock has shown great maturity as he has aged. He has changed his mind definitively and made a positive contribution, whereas the noble Lord, Lord Stoddart, is telling us the same fairy tales that he was telling us 40-odd years ago.

Lord Kinnock: What I did was much simpler than what my noble friend suggests. I heeded the words of a former Member of this House, Lord Keynes, who advised that when he discovered he was in error he changed his mind. "What do you do?", he said—and I am still asking that question of some dear friends who are erstwhile comrades.

Lord Tomlinson: I do not wish to delay the House much longer. I have only two more points to make. The noble Lord, Lord Stoddart, told us that we would have full, frank and accurate analysis. I suppose one out of three is not bad; it was certainly full—but frank and accurate it was not. It was a distortion of the historical position.
	I agree with two points made by other noble Lords. Importantly, the noble Lord, Lord Owen, clearly said in his opening remarks that we can do without these words that Amendment No. 2 would add. He would prefer to have them there, but they are clearly not imperative to the Bill. I also agree with the analysis of the noble Lord, Lord Lester, and the views that have emerged from the legal sub-committee of your Lordships' House, which have examined this question in great detail and have come to a conclusion that is completely opposed to the rhetoric that we have heard from opposition spokesmen here today.
	I remind the Committee of the important words of John Palmer when he gave evidence to the Select Committee, which were echoed by Professor Damian Chalmers of the London School of Economics. Describing this amending treaty, they said that it was much ado about not very much.

Lord Williamson of Horton: I declare an interest as having spent a large part of my life working on European affairs in the United Kingdom Civil Service and some part of it in the European Civil Service. As part of my conditions of employment, I have pensions from both sources. That is fairly straightforward. I hope that this declaration of interest will last for the whole of the Committee stage, because I would not like to have to say it every time.

Lord Pearson of Rannoch: I congratulate the noble Lord on being the only Member of your Lordships' House to declare that he is in receipt of an EU pension, which can be lost if one fails to uphold the interests of the Communities, as we shall discover as we proceed.

Lord Williamson of Horton: It is a great pleasure to be a friend of the noble Lord, Lord Pearson of Rannoch, while not being a friend of the United Kingdom Independence Party. As an independent Peer, I am in a remarkable position; that is, I have no political baggage whatever; I have no commitment to a referendum on the original constitution; and I have no commitment of a political kind to having no referendum on this treaty. I offer only the view of a citizen. I have no political baggage. I do not have to transcend, as everyone else over there has said, political points or political history. There will be no transcending on my part.
	I fully understand that we will have nine days of debate and come to a serious decision at the end, with a vote no doubt, on whether this treaty should be discussed with a view to ratification, as the Government propose, in the parliamentary procedure, or whether it is of such importance and such a constitutional nature that there should be a referendum. That is the main part of the issue ahead of us. It is the soap. Today, we have the trailer, because we have not come to that decision, and there are disagreements in the Committee on whether there should be a referendum. So we will come to that.
	For the moment, I shall stick to the narrow issue of the amendment as proposed. We are sometimes so wide of perspective in this Chamber that we do not quite notice the narrow points, so I allocate to myself a chance of looking at the specific point. I heard the arguments of the noble Lord, Lord Howell, but I question whether it is right to change the system under which we simply list treaties, as we have in the past, important or not, in the European Communities Act. On the whole, I would prefer not to do that, because we have followed a different procedure, even on important treaties, in the past.
	My second point has not been made and may be disagreed with by the movers of the amendment. The amendment as proposed is in Eurospeak. When people start talking about altering constitutional arrangements, they are easily understood in this Chamber. However, in the greater part of our kingdom, people do not clearly understand what that implies. I can understand that some Members might like to spell out in much greater detail, as suggested here, not in these words but in a fuller description, what this treaty is concerned with, but, as it stands, it does not tell the citizen very much. It tells us that we are specialists; we know about constitutional arrangements or think that we do; but ordinary citizens do not gain very much from there being written in at the beginning of a list of treaties something which says that this treaty alters constitutional arrangements. I understand the motivation behind the amendment, but it does not do much good for the consumer for this to be written out. It tells them very little. I make that point because I have not heard it made by others. In the course of nine days of debate, it is extremely important that one or two points be made which have not been made by other Members of this Committee.

Lord Blackwell: I support my noble friend's amendment and speak to Amendment No. 125 in my name, which is in the same group. Like other noble Lords, I should very much like to get down to the substance of these treaties but it is difficult when the Government continue to deny in effect the substance of what we are supposed to be debating—the consolidated text, or the end result of it. This is not a historical textbook; it is not even a novel by Trollope. It is a substantive document that sets out the basis on which the EU will be run and governed over the coming years. It is very difficult for a common-sense reader not to conclude that it is a constitution for the European Union.
	There is an executive answerable to the European Parliament, increasingly sharing powers with the Parliament rather than answerable to the nation states, as was originally intended. The treaty declares for the first time that the European Parliament creates democratic legitimacy for the European Union as a sovereign entity in its own right, with increasing powers for that Parliament. It has a powerful president, who will shape the agenda of the Union, and its own court, which is not answerable to any other court but is the highest court in the territory in which it operates. It gives the European Union a legal identity and the power to enter into international agreements. The nation states, which used to be in charge of this thing, are now relegated to the status of members of a senate, in which they have majority voting to decide what they do or do not agree with, and can be taken to court under a number of provisions of this treaty if they do not do as the European court has ordained it that as nation states they should do.
	Any common-sense description of this treaty would say that it was a description of a sovereign entity called the European Union, and that this was its constitution. Noble Lords do not have to take my word for it, because the Government published exactly the same text two or three years ago with the label "EU constitution" on the front of it. Yes, the articles have been put in a different order—but at Second Reading I made the point to the Minister that I could find only two articles in the constitutional text that were not reproduced in whole or in part in the Lisbon consolidated text. The Minister did not reply at that stage and the Government have studiously avoided giving us that comparison. If they seriously want to make the argument that this document is different from the constitution, I challenge the Minister to set out which articles she thinks are in this text that were not in the constitution and which articles were not in the constitution that are not in this text. I say that there are two—and I should like to hear her contradict that, if she wants to take these arguments seriously.
	I move on to Amendment No. 125, which is related and refers to the provisions at the front of the constitution that set out the objectives. It is not uncommon for constitutional documents to set out the objectives under which the rest of the constitutional clauses fall. These have particular significance; they are in Article 3 of the consolidated text. The House of Lords report on the impact of the treaty, to which we have referred, notes that the objectives are not just there for window dressing and are not just nice narratives, but that they are,
	"likely to have some effect on the way in which other provisions of the Treaties are interpreted, not only by the European Court of Justice but also by the other institutions when undertaking their tasks".
	So the initial objectives of the constitution have a real significance for us.
	The Lisbon treaty adds new objectives, which this House needs to take note of, because they may in many ways cut across objectives that UK Governments may wish to deploy. In particular, the treaty introduces the objective in Europe of creating a social market economy, aiming at full employment and promoting social justice and protection. We all know that those words are code words; they have a political meaning and are not just nice objectives. They will be interpreted by European Governments and the European court to imply a particular kind of social market policy—a protectionist, high cost and, as it turns out, uncompetitive market. It is a particular view with which many of us in this country disagree.
	When those objectives are put alongside the Charter of Fundamental Rights, there is real concern that it creates scope for rulings by the European court that directly impact on the UK's freedom of action, and, in particular, on the Labour market. The House of Lords report I referred to earlier also notes that these objectives may be taken as justifying the extension of European Union competencies under what was the old Article 308 and is now Article 352. In other words, the fact that these objectives are set out there will allow the European Union to extend its powers under its constitution in new areas.
	These are political objectives and have no place in a constitution. The consequence is that a future Government could sign up to things as a result of them, which would bind their successors to a particular political format of Europe that may not be the political philosophy that they wish to pursue. In that way, the constitution may end up constraining the freedom of action of a future UK Government.
	My amendment seeks to bank the Government's assurance that future governments will not be bound in that way. I am sure that the Government will ensure that this is not a constitution and that the use of these objectives to constrain the UK law will not be possible. I wish to bank that assurance by my amendment which makes clear that the UK laws cannot be constrained by the wording of these objectives. I ask the Minister to confirm—since I am sure that she will want to make those assurances—that she is perfectly happy to accept my amendment that puts that provision in the Bill.

Lord Pearson of Rannoch: It may be helpful if I follow my noble friend Lord Blackwell as my name is on Amendment No. 126, which follows his Amendment No. 125 to which he has just spoken. The wording my colleagues and I have used on the amendment reappears often in the Marshalled List. Its purpose is to ensure that whatever amendment we pass into the Bill—and I very much hope that we will eventually pass my noble friend's amendment—actually bites, and that the wording of the original European Communities Act cannot be used to circumvent whatever we decide in the Chamber. I am afraid that, without our amendments, that is the position.
	I am sure that I do not need to remind your Lordships of the whole of Sections 2 and 3 of the European Communities Act 1972, but can paraphrase it. Section 2 for the first time passed the power of the British courts to the Luxembourg Court of Justice. The particular part of the 1972 Act which I fear should go on record in your Lordships' proceedings—Section 3(1)—reads as follows:
	"For the purposes of all legal proceedings any question as to the meaning or effect of any of the Treaties or as to the validity, meaning or effect of any Community instrument, shall be treated as a question of law (and, if not referred to the European Court be for determination as such in accordance with the principles laid down by and any relevant decision of the European Court)".
	In other words, from then on the European court ruled. Our amendment would exclude those words from any amendment that we may pass to the Bill.
	Secondly, my contribution to the debate will be to ask the Minister two questions, which I asked her in writing and which she has not yet answered. I think they will help to inform the Chamber about whether this really is a constitution. I will end by making a third suggestion which I hope will allow the House better to understand these proceedings.
	The first question which I wish to put to the Minister has achieved the distinction of being No. 2 of the unanswered Written Questions. I asked Her Majesty's Government what is the legal status of the European flag and anthem in the United Kingdom and in the rest of Europe. That is an important question because I understand that the only difference of any substance between the constitution upon which a referendum was promised, which the Dutch and the French voted down, and the treaty which is now before us is that the flag, the anthem and Europe Day have been left out. It would be helpful if the Minister were to answer that Question, bearing in mind that the flag and the anthem are used all the time and the fact that they are being left out of the constitution does not mean that the flag will be pulled down or that Beethoven can be relieved by no longer having his wonderful music abused in such an unfortunate cause. What is the legal status of the flag and the anthem and what is our relationship to it?
	Secondly, I asked the Minister two Questions to which she was good enough to reply but which she did not answer. Those Questions were answered on 28 February. I asked Her Majesty's Government:
	"On which areas of United Kingdom national life the European Union is not able to legislate"—
	that is, now—and, as a sort of second barrel to that Question, I asked Her Majesty's Government:
	"On which new areas of United Kingdom national life the European Union will be able to legislate if the Lisbon Treaty is ratified".
	I was asking what there is in our national life that the Brussels system of law-making cannot touch. She did not answer. She gave the same Answer to both those Questions, which was:
	"For the first time the Lisbon Treaty defines the Union's competences, setting out where the EU can and cannot act".
	That is not an answer to the Question. She continued:
	"These competences are set out in Article 2(12) of the Treaty of Lisbon— ... pages 52-55—presented to Parliament in December 2007. The treaty explicitly states that competences not conferred on the EU remain with member states".—[Official Report, 28/2/08; col. WA 133.]
	The trouble is that if you look at pages 52 to 56 of the treaty of Lisbon, you are left asking the same question: what area of our national life can the EU not touch? I will not go through it all now. Your Lordships can read about the exclusive competences, the shared competences, the internal market, industry, culture, education and civil protection. It goes on and on. It is very difficult to find what areas are left out, especially when one bears in mind the justice and home affairs element of the new treaty and the common, foreign and security element.
	I did not intervene further in the speech of the noble Lord, Lord Wallace, because I felt that the mood of the House was that it was time he moved on and into the future. However, I remind him that as regards the international obligations to which he says we are subject and which deprive us of our sovereignty—I think that he mentioned NATO, US bases here and so on—we can leave those tomorrow if we wish and they do not make the majority of our law which we do not want.
	I repeat that the basis of our constitutional settlement is that the British people elect and dismiss those who make their laws. We have now come to a situation where the majority of our national law is made in Brussels and imposed on this Parliament by the Brussels system. To make matters worse, under this treaty we now grant legal personality to the new Union. I am assured in Brussels that that is regarded as the jewel in the crown when the court gets going. As other noble Lords mentioned, there is the passerelle clause. The noble Lord, Lord Hannay, is right—the treaties which went before this were all constitutional.
	It is true, unfortunately, that my former friends in the Conservative Party got it wrong in not granting a referendum on the Single European Act, the Maastricht treaty, Amsterdam and Nice, which many of us in this House tried as hard as we could to get. I repeat that five wrongs do not make a right and we in the UK Independence Party are prepared to welcome a sinner that repenteth in the shape of my former friends.
	My helpful question for your Lordships—I hope—is to the Minister. I reach it by quoting another of my favourite quotes on why this treaty is indeed the same as the constitution. It is from Mr Karel De Gucht, the Belgian Foreign Minister, and it goes as follows:
	"The aim of the constitutional treaty was to be more readable; the aim of this treaty is to be unreadable ... The Constitution aimed to be clear, whereas this Treaty had to be unclear. It is a success".
	My final question to the Leader of the House is: can she help us with this? Surely it would be reasonable for the Foreign Office to produce for your Lordships for the rest of the proceedings on this Bill a very simple index of the treaty of Lisbon, so that when we come to debate a subject we can look it up in the index and find it in the treaty without having to wander all through the previous treaties, all through what is left of the constitution, the renumbered documents and the total confusion that surrounds the examination of what is before us.
	I do not know whether any other noble Lord would care to support that request, but there are armies of people in the Foreign Office who no doubt have such an index at their fingertips, because otherwise they have to go to their computer to look up where something is in the treaty. If that index could be made available to all noble Lords, I am sure that it would facilitate our proceedings.

Baroness Symons of Vernham Dean: I found two contributions to today's debate on the amendments very persuasive. First, I thought that the contribution from the noble Lord, Lord Owen, made a telling point about constitutional amendments and that when we think that something affects our constitution we should be clear and straightforward about that. I also found that the detailed analysis by the noble Lord, Lord Blackwell, reflected the very thoughtful and penetrative contributions that he made during the work of the Select Committee on this treaty.
	For me, the whole question comes down to two issues: what is a constitutional arrangement and what changes amount to real alterations and real amendments? That is the first point. Secondly, are they of sufficient importance in this treaty to merit particular mention in the Bill? There is no doubt, looking at the changes in this treaty, that there are institutional changes, operational changes and definitions of competences. There are the red lines that have been drawn that affect the extent of the changes in the relationship between the European Union and the United Kingdom, and no mention has been made of those. It seems to me that what the Bill is talking about at the moment has no more of a constitutional impact than that which we have seen in previous treaties, and that what we really see here are changes to who does what and the operational way in which we conduct our business between ourselves and the European Union.
	I thought that the noble Lord, Lord Forsyth of Drumlean, would be more persuasive if he could possibly be a little bit less offensive in how he expresses his very forthright views. People who disagree with us are not necessarily liars; they are not necessarily deceitful, monstrous people. There can actually just be straightforward political disagreement, and that is what we are dealing with here, not some horrible perfidy on one part of the House rather than the other.

Lord Forsyth of Drumlean: I did not call anyone a liar; I said it was a lie to the British people to say that they would get a referendum on this treaty. Listening to the noble Baroness, I would remind her that she was a member of the Government who argued that the previous treaty was no more than a simple tidying-up exercise. The Prime Minister subsequently changed his position to argue that it was a constitutional treaty that required a referendum. I believe that that was a deceit and I do not withdraw that in any way. It is not a matter of having a disagreement; it is a matter of what her party promised the British people, what elected Members promised and what is now not being provided.

Baroness Symons of Vernham Dean: The trouble with that is that I think that someone who tells a lie is a liar. I do not know how the noble Lord draws a distinction between saying that those who have told a lie are not liars and that those who told a lie are something else. But we will let that stand. If the noble Lord is willing to say that we are not liars, but that we have told a lie, we will let that stand. It seems a peculiar distinction to want to make.
	Even if some do want to describe the changes as constitutional, we must all admit that this is an argument about whether or not we support the move towards a referendum. We went over this point in enormous depth for more than 12 hours at Second Reading. I fully understand that we will go over and over it again, but it seems that essentially what the noble Lord, Lord Owen, based his very powerful argument on was the question of whether the words in the amendment merit inclusion in the Bill. He said that he believed that the changes were constitutional and, therefore, merited inclusion in the Bill, because that should have been done with Bills on previous treaties. I do not think that that argument stands up. To make an unprecedented move to include these words in the Bill is to single it out and to single this treaty out as being of paramount importance and having more constitutional impact than its predecessors. Otherwise, why single it out? Why say that this treaty merits that sort of treatment when other treaties do not?
	I do not believe that anyone who has looked at European treaties over the years can honestly believe that this treaty has more constitutional impact than the treaty of Maastricht or the Single European Act. It simply does not. I do not know of an academic, any colleague of mine who has held office in the Foreign Office, a politically neutral civil servant or anyone else who would say that.

Lord Lamont of Lerwick: I—

Baroness Symons of Vernham Dean: I have obviously had some impact.

Lord Lamont of Lerwick: I apologise to the noble Baroness for interrupting her flow. On her point about the comparison with Maastricht, I ask her three questions. First, is she aware that the Foreign Secretary himself has said there is more movement to QMV in this treaty than in Maastricht? Secondly, is it not a major point, as the noble Lord, Lord Owen, pointed out, that in huge areas the pillared approach continued under Maastricht? Thirdly, the most important area that was not part of the pillared approach was the single currency. A referendum was, indeed, promised in the single currency provisions.

Baroness Symons of Vernham Dean: I am aware of the last two points, but I was not aware of the first. I would like to check that before accepting the noble Lord's word for it, because it would be pretty peculiar if that was what the Foreign Secretary said. I will certainly go away and look at that, but the points that the noble Lord has made do not undermine my argument in any way.
	My first point is that a constitutional arrangement is not the same as an institutional arrangement, an operational arrangement or defining competencies, all of which are clearly in this treaty. Even if you take the view that there is a constitutional impact, I would argue that it is no more than the constitutional impact of any treaty, because a treaty has an impact on sovereignty, as the noble Lord from the Liberal Democrat Benches described when he spoke earlier. It seems to me that we are setting a bizarre precedent in wanting to put these words in the Bill when most of us—obviously not the noble Lord, Lord Lamont of Lerwick, and probably not the noble Lord, Lord Forsyth—do not believe that this treaty has anything like the constitutional impact of its predecessors. Why take this one and make a precedent now? There can be only one reason: it is because it is the bridge-head into the argument about the referendum. The noble Lord, Lord Forsyth, has been very clear on that point but I do not believe that his argument stands up. I think that I have an honest disagreement with him and we will debate that further, as we did at Second Reading. I do not think that the words "lie" or "deceit" are appropriate but the noble Lord will go on using them and I shall go on objecting.

Lord Pearson of Rannoch: Could we compromise with "breaking a promise"? Would that do?

Baroness Symons of Vernham Dean: Before the noble Lord goes any further, that will not do either, but I am sure that we will come to that in due course. This is a Second Reading matter and we will come to amendments later. Let us leave it until then.

Lord Pearson of Rannoch: This is not Second Reading. Surely the noble Baroness accepts that there is something in the cumulative argument and the cumulative effect of all these treaties and that this is the one that breaks the camel's back. Does she see no force in that argument?

Baroness Symons of Vernham Dean: No, I do not. For the reasons that I explained clearly at Second Reading—the noble Lord was in his place at Second Reading because he beamed at me when I made the points—I do not accept his argument. However, it is an argument of honest political debate, not of the name-calling that we have heard this afternoon.

Baroness Park of Monmouth: I want to make a very brief intervention. Is it not the case that relinquishing full control of our defence policy by agreeing to QMV is a major constitutional decision that affects everything in this country? I cannot see that that is not an issue affecting the country.

Lord Anderson of Swansea: Answering that specific question, I had the honour to be a member of Sub-Committee C of the European Union Committee, and the effect on our foreign and defence policies was explored exhaustively under the excellent chairmanship of the noble Lord, Lord Roper. We took extensive evidence and came to a wholly different conclusion to that of the noble Baroness.
	At least the noble Lord, Lord Pearson, is honest and clear in his objectives. He wants to leave the European Union and reverse all our policies since we joined. It is sad that the objectives of the Conservative Party in this debate on the European Union are not so clear. The Conservatives retreat into an attempt to recreate the Union in their own image, but that image is not shared by any other member of the European Union and it is therefore a total illusion.
	The dangers in today's debate are, first, the temptation to anticipate the debate on the referendum which is to come—I think that the noble Lord, Lord Forsyth, fell into that trap, as though he were unaware that we will no doubt have several debates on the referendum at different stages of the Bill—and, secondly, the temptation to enter into semantic argument not about lies but about whether this is a federal or confederal matter and whether the treaty is or is not a constitution. We can lose ourselves in the highways and byways of such arguments. Indeed, objectively, the high water-mark of federalism within the European Union was probably the Maastricht treaty. Since then, a number of modifications have moved away from that high water-mark, including the safeguards contained in the Lisbon treaty, which, for example, give much greater powers to national Parliaments. I believe that the spirit of many leaders in the European Union, not least President Sarkozy and Chancellor Merkel, has moved substantially in that direction, probably following their electorates.
	I do not follow the noble Lord, Lord Owen, in saying that in effect the 1992 general election was, at least in part, a substitute for a referendum on Maastricht. Even if there were a referendum, it would probably be on a wholly different issue from the purported issue for the referendum, as happened, for example, in the Welsh referendum of 1997. I played a large part in that at the time and the issue was: "Do you or do you not favour the Callaghan Government?". When I campaigned with the French socialist party on platforms in France on Maastricht, the issue was not the Maastricht treaty, but "What do you think of President Mitterrand?" and various other matters which were basically irrelevant to the terms of the treaty. I remain wholly sceptical about referendums. I think it was President Mitterrand who said that in referendums the French people always answer the wrong question.
	Sadly, the real danger is how the Conservative Party will react. Will there be a genuinely positive, line-by-line examination of the Bill, or will its members act in the spirit of destruction of all that is there, yet at the same time purport to be good Europeans? Scrutiny, yes; negativity and destruction, no. I look forward to seeing whether there is a scintilla of a positive approach to Europe emerging from the Front Benches opposite.
	Surely the main point in this debate is that made by the noble Lord, Lord Hannay. The amendment simply says,
	"which amends and alters constitutional arrangements between the European Union and the United Kingdom".
	It is absolutely clear, as the noble Lord, Lord Hannay, said, that such a form of words was not used in previous treaties. In previous treaties, all that happened was that the name of the treaty—whether Maastricht or the Single European Act—was simply transmitted from the decision of the intergovernmental council into the form of a Bill which enacted that treaty. So one is bound to pose the fundamental question: what is the difference? Why now, when it was not considered appropriate in those earlier treaties?
	Perhaps I can turn to the Metternich question. After several days of eyeball-to-eyeball negotiation with his Russian counterpart, news was brought to him at the start of the next day that his Russian interlocutor had died during the night. It is alleged that Metternich said, "What was his motive?". I will pose that same Metternich question: what is the motive of the opposition Front Bench in moving this amendment to the Bill when there was no similar provision in earlier Bills? The only reason that I can see for inserting the word "constitutional" at this stage is to use it as a kind of paving stone for a referendum.
	I will avoid the semantic, the tempting discussion of saying what a constitution is. Do we in the UK have a constitution? Yes, we have elements of a constitution. Even written constitutions can be altered fundamentally. Look at the difference between the US constitution of the founding fathers and that which exists today. Look at the way in which, for example, the different presidents—President Roosevelt as an activist president and President Eisenhower as a more placid president—led their country, or look at President de Gaulle and President Pompidou and the constitution of the Fifth Republic. Let us avoid that and come back to this amendment. Of course much will depend on experience, but, in my judgment, this amendment is not necessary. It is a departure from earlier precedents and it is bad practice to seek to amend the clause and to insert this amendment at this stage.

Lord Fraser of Carmyllie: I hope that today, or at some future date the Labour Party and the Liberal Democrats will combine to defeat this amendment because then neither I nor the British people will ever have to read their manifestos again. I am not going to engage in some philological discussion about whether the Labour Party manifesto was a lie, but the British people—and we are an unelected Chamber—were told this:
	"We will put it to the British people in a referendum and campaign wholeheartedly for a 'Yes' vote".
	The Liberal Democrats said:
	"We are therefore clear in our support for the constitution, which we believe is in Britain's interest—but ratification must be subject to a referendum of the British people".
	I alone in my old constituency argued in favour of a yes vote in the referendum in the 1970s, and not a single member of the Labour Party supported me. We had such a heated meeting that Norman Godman, who I am sure the noble Lord, Lord Kinnock, will remember was subsequently the Member of Parliament for Greenock, stood up in a public meeting and said, "Not everybody in the Labour Party is campaigning for a no vote but in this constituency we are". That was the situation.
	I am not in favour of referendums; they are not a good idea. It is the responsibility of the elected House of Commons to come to a decision on this. But the British people were told by the Labour Party and the Liberal Democrats that there would be a referendum and that they need not engage themselves in this issue at the general election. That is the point. It is not whether one is for or against Europe, or about any attitude along the line, but about the fact that the British people were misled. That is fundamentally anti-democratic and I shall be saying so at the next general election.

Lord Harrison: I hope noble Lords will forgive me for absenting myself for 20 minutes while I attended the European Union Select Committee and also if I fall into the trap offered by the noble Lord, Lord Wallace, and speak to the amendment before us and examine it line by line. The amendment would add to the rubric of the Bill the words,
	"which amends and alters constitutional arrangements between the European Union and the United Kingdom".
	I will vote against it for the reason that it does not improve the Bill and could be thought of as misleading because it highlights a constitutional basis to the Bill.
	I listened hard to the noble Lord, Lord Owen, in his interesting intervention. It may be true and that all such Bills have some constitutional element, but it is for Members of the Committee to judge how potent or otherwise the constitutional element is. Despite what the noble Lord, Lord Lamont, said, the 1972 Act establishing the European Community, the Single European Act 1986 and the Maastricht treaty in 1992 all contained clear and obvious elements of constitutional change in respect of the United Kingdom vis-à-vis the European Union, and might be considered transparent. As far as I know, we did not have any such rubric saying, "Watch out, there is a constitutional change being made". It would be misleading to add this now to the Bill.
	I have heard some interesting examples from both the leader of the Conservatives and the leader of UKIP in this House today. They have both invoked the familiar idea of the straw that breaks the camel's back. My memory of recent political history is that back in the 1970s the Conservative Party brought along bales of straw and loaded the first load on this unfortunate camel. Mrs Thatcher's Administrations brought further bales of straw to put on its back; then Mr Major, in his turn, brought his tithe of bales of straw. By now, the poor camel was labouring under the European constitution in all its brightest form, yet it is now our Government who bring along the single straw that breaks its back. All the constitutional elements that the men of straw opposite have brought over the years are as nothing compared with the straw that now breaks the camel's back.
	The noble Lord, Lord Howell of Guildford, who I am sure is very familiar with loading bales of straw on camels, plucked out of the air the notion that the amending treaty before us is 96 per cent—so precise—of the former constitutional treaty. From where does he pluck that figure? Is it from the same pocket or shelf as that from which his colleagues plucked 99 per cent, 92 per cent and 88 per cent? During his opening speech, he mentioned his assessment that an element that has been excised from the original constitutional treaty is the simplification that the noble Lord, Lord Forsyth, talked about, although it performed the useful function of trying to simplify and make more readable all the Acts that have been through this Parliament with reference to the European Union constitution on previous occasions.

Lord Howell of Guildford: I shall come back to these matters later, but I am afraid it is just more arithmetic. If 242 out of 250 measures in the constitutional treaty are in the Bill, that works out at 96 per cent. It is just straightforward maths; there is nothing dramatic about it.

Lord Harrison: The maths admit what I was going on to say which is that the element of revision—which would be, in the noble Lord's words, so useful as the British public and the public of the European Union could read the simplified and cleaned-up version of all that governs us in the European Union—is more than 4 per cent of the original constitutional treaties.

Lord Forsyth of Drumlean: I think the noble Lord may have misunderstood what I said. I referred to the Government's line on the previous document, which was called the constitutional treaty before the Prime Minister gave his commitment to a referendum. The Government's line against a referendum was that it was a simple tidying-up exercise and there was nothing in it of major or constitutional importance. The Government then changed their line when they promised the referendum and are now using the previous line. It is not about simplifying. As my noble friend said, they are identical documents; all that has changed is the Government.

Lord Harrison: I hope the noble Lord, Lord Forsyth, will concede that an element of the original constitutional treaty was the attempt to summarise and simplify all the treaties that had gone before and that, in that, it was a useful exercise. I ask the noble Lord, Lord Howell, to clarify that.
	We are now being asked to include in the rubric of the Bill words trying to emphasise the constitutional arrangements. That would be misleading to the British public. It was not done before, when clearly there was every right and purpose in doing so. That is why we should vote against the amendment.
	I do not often treasure the words of the noble Lord, Lord Pearson of Rannoch, but I shall treasure his description of this treaty as a straw, because I feel that in the next six weeks we will hear quite different weights given to this treaty by the noble Lord and each time I shall be thinking of that straw.
	The cumulative argument, which the noble Lord has made use of to justify the amendment, which was made use of also by the noble Lord, Lord Howell of Guildford, does not wash. We are asked to ratify, or to prepare the ground to ratify, this treaty. We are not asked to give further parliamentary consideration to all the other treaties to which this rubric was not attached. So the cumulative argument cannot wash; nor can one accept that it was only an unfortunate oversight by the various Governments formed by Members opposite who put the Single European Act and the Maastricht treaty to this House and the other place that they forgot to mention that there were some constitutional implications.
	I am addressing this simply because it is the noble Lord, Lord Howell, who has proposed the amendment. He has now revealed that the thrust of it is because of the cumulative effect of all the treaties. That will not work, so I argue very strongly that we should follow the practice that we have followed with previous European treaties and simply list this treaty with no qualification and no reference to its nature or style.
	The noble Baroness, Lady Symons, has a very beguiling bedside manner, but I fear that I cannot follow her prescription. I much prefer the prescription offered by Dr Owen—I beg his pardon, the noble Lord, Lord Owen—who advocated constitutional medicine. This is definitely a constitutional treaty. To pretend otherwise is utterly absurd. We have not heard many quotes, so I will give the House a few quotes this evening. My noble friend Lord Howell mentioned Angela Merkel, who said:
	"The substance of the constitution is preserved. That is a fact".
	The Spanish Prime Minister has said:
	"This is a project of foundational character, a treaty for a new Europe ... We have not let a single substantial point of the Constitutional treaty go".
	It has also been said that 96 per cent of it is still there. The Czech Republic said:
	"Only cosmetic changes have been made".
	Denmark said:
	"The good thing is ... that all the symbolic arguments have gone, and that which really matters—the core—is left".
	So we go on. Belgium said that the new treaty takes up the most important elements of the constitution. Speaking for Luxembourg, Herr Juncker said:
	"The substance has been preserved from Luxembourg's point of view."
	Monsieur Valery Giscard d'Estaing, the author of the constitution, was delighted, and notes on this blog that:
	"a rerun of a great part of the substance of the Constitutional Treaty"
	is still there.
	Then up pipes the small voice of our Foreign Secretary who says, suddenly, against all the evidence:
	"The constitutional treaty has been abandoned".—[Official Report, Commons, 3/7/07; col. 803.]
	How very odd. He is the only person, the only Foreign Minister, to say that, and only our Government seem to believe that this is not a constitutional treaty, so they are not having a referendum.
	The amendment proposed by my noble friend Lord Howell is absolutely right. I say to the noble Baroness, Lady Symons, and the noble Lords, Lord Hannay and Lord Anderson, that you can justify not having a referendum on the Maastricht treaty because it was in no political party's manifesto, whereas having a referendum on this treaty was a manifesto commitment. That is a major difference.

Lord Tomlinson: Will the noble Lord once and for all understand that the promise of a referendum was on the original constitutional treaty? That died with the two referenda in France and the Netherlands. The constitutional treaty was abandoned. We now have an amending treaty. The promise in the manifestos was made in relation to the former, not the latter.

Lord Willoughby de Broke: The noble Lord obviously was not listening when I read out the quotations from all 26 heads of state in the European Union, who said, "This is a constitutional treaty, thank you very much". Of course it is a constitutional treaty. I do not accept it, and I will not accept it. I am sorry about that.
	I said that the fact that none of the Governments had offered a referendum on the Maastricht treaty was one reason why we did not have a referendum on this treaty. We should have a referendum, however, first because it is in the manifesto, and secondly because, as my noble friend Lord Pearson said, several wrongs do not make a right. Where do we stop? Why should we not have a referendum on this treaty just because we have not had one on previous treaties? Do we stop and say, "Yes, let's consider this. Let's offer it to the British people", or not, even though we have not had referendums before? All parties gave a manifesto commitment to have a referendum on this treaty, so we should have one. My noble friend is quite right; five wrongs do not make a right, and it is time to have a referendum. I am quite sure that we will debate that in due course. Meanwhile, I support the amendment wholeheartedly.

Lord Kinnock: I am somewhat unused to, or perhaps bemused by, the inclination of the more profound and chronic Eurosceptics in the Chamber, especially those from UKIP, to endow the words of other European leaders with massive authority, which contradicts very strongly their otherwise unblemished record of regarding with contempt the judgment of the very same people. It is quite extraordinary.
	I rise only to reinforce the point made by the noble Lord, Lord Hannay; that is, to emphasise that among the other features of this amending treaty, which distinguish it clearly and implacably from the previous constitution, is the fact that that constitution would have displaced and replaced every single treaty of the European Community. This treaty does not do that. It amends, which is distinctly different from accumulating, replacing and codifying all that has gone before. It simply takes its place alongside the treaties of Maastricht and of Nice, the single Act and the assortment of other adjustments that have had to be made over the 50-year lifetime of the European Union, in order to be able to face the altering realties of the world and the continent in which we live and to equip the sovereign democratic states of a larger European Union with the collective means of dealing with the common threats and opportunities much more effectively than would otherwise be possible.

Lord Forsyth of Drumlean: Will the noble Lord deal with a point made by my noble friend? He has described how the treaty is not a consolidation measure but an amending treaty. Will he tell us how it differs from the original constitutional treaty and what makes it not a constitutional treaty, rather than describe the consolidation aspect?

Lord Kinnock: The noble Lord must have suffered untypically from a momentary lapse in concentration, because I just told the Chamber about just one of the features that categorically and irreversibly makes a difference between the amending treaty, which is currently under consideration, and the constitutional proposal that was previously before Europe until it was killed off by the electorates of the Netherlands and France.
	For the record—this may permit me not to have to cover the same ground again and again in the days stretching out before us, although I live more in hope than in expectation on that point—I never favoured the necessary amendments to the procedures, practices and systems of the enlarged Union being called or supported as a constitution. The noble Lord, Lord Patten, was here earlier. I am certain that he would bear testimony to the fact that in the European Commission when we considered these matters with the two representatives that we had on the so-called convention, I repeatedly made the point—to his credit, he made similar points—that since what was being proposed, despite the grandiose terminology of Giscard D'Estaing, did not alter the way in which any of the democracies of the European Union were to be governed, it could not therefore justifiably be called a constitution. I continue to insist on that valid point and I had some pleasure in putting it directly to Giscard D'Estaing when we had the opportunity to discuss these matters.
	I should like to make another brief point, which is connected to my former point. Publicly, repeatedly, and sometimes in contradiction of the leadership of my party, I made it very clear, well before the 2005 general election and the compilation of the manifesto as well as after, that since what was being proposed could not be regarded justifiably as constitutional, it did not in this parliamentary democracy warrant a referendum.
	We can discuss the merits of referendum, but I am certain that noble Lords who have said that Members on the other side are pursuing a political line are correct. However, it would be implausible—indeed, impossible—for this House or any House of Parliament to try to avoid being political in its argument, so I do not quarrel with the right of Members opposite to offer political arguments. I echo the view of my noble friend earlier who rued the fact that words such as "lying" and "deceit" were used, but it is up to the people who use them to decide whether they adorn or undermine the force of their argument. I leave that entirely to noble Lords opposite.
	If it is argued now that on this treaty there should be a referendum, and that the final judgment on this treaty should be taken away from Parliament and be made the subject of plebiscite, where does that stop? If the answer cannot be offered as to where it stops, what issues are fit to be determined by Parliament and what issues are of such concern and such status as not to be considered by and determined by Parliament, where does it stop? Until that question is convincingly answered—not conveniently answered—at least we shall know who put the "dum" in referendum.

Lord Alton of Liverpool: With his usual distinction, the noble Lord, Lord Kinnock, has done the service to the Committee of trying to disentangle the issues of what is a constitution and what is a treaty. He also has done us the service of trying to flesh out the difference between allegations made from one side of the Committee and those from the other.
	Like others who have declared their positions during these debates, the first political meeting I went to was called by Mr Grimond, held in the town where I then lived, in favour of the Common Market. I was in favour of that and, as a teenager, went to that meeting with great enthusiasm, not least because my father was one of five brothers who had served in the Armed Forces. One brother died in the RAF. My father was in the Desert Rats and survived. They all believed, as I did, that the community of the European nations should come together and do what they could to create reconciliation in Europe. I believed in the ideas of Maritain, Mounier, Monnet, De Gasperi and others who had created the European Community.
	Throughout the 1970s, alongside others who fought for that idea, in the difficult environment of Liverpool where I was a Member of Parliament, I fought in favour of the retention of our membership of the European Community when the then Labour Government called a referendum, which was the right thing to have done. It was right also when I stood alongside the late Peter Shore and the noble Baroness, Lady Thatcher, and argued for a referendum in favour of Maastricht, although I was in favour and they were against.
	It is right that there should be a referendum now on the Lisbon treaty. The reason why I think that, and I agree with my noble friend Lord Owen on this, is that this is an issue of trust. The question placed before the electorate at the last general election was clear. Like other noble Lords, I have been out on the streets in the most recent local elections campaigning for candidates of different political persuasions—I am an independent Peer, so I can do that—and I heard again and again people raising their concerns about this matter. The issue for them is one of trust. They ask why it is that they were promised the opportunity to vote in a referendum on the Lisbon treaty when it is now being withdrawn. We are in grave danger of misunderstanding the feeling among many people who believe that elites are driving them into something of which they are not in favour. That is what the House has to consider.
	The goal for the European Community that the original founding fathers had in mind was a good and noble one, but in some ways it has left people behind. In that sense the noble Lords, Lord Pearson and Lord Willoughby de Broke, and others have expressed a sentiment that we should at least be alive to in this House. To drive this on without any consideration for those concerns would be a huge error. And what is it that we are so frightened of? I have no fear of campaigning in a referendum, and indeed if it were on the referendum question that was begged by some of my former friends in another place recently—whether we should remain a member of the European Union—I would argue that we should. Surely that is not a question we should be frightened to put to the people of this country. I am concerned that we, in these confined spaces and rather refined environment, are losing sight of that.

Lord Waddington: I apologise for not being present at the beginning of this debate. There is one point which is it important to make: we should keep in mind the bearing this matter has on the issue of the reform of this House. Some noble Lords—I can see one of them in their place—are vehement Europhiles and believe that this place should remain a largely nominated Chamber. But a lot of people are watching this House, and if the nominated House does not use its powers to make the elected Members in the other place honour the promise that every single one of them made to the electorate to support a referendum on the matters set out in this Bill, quite frankly, we might as well all go home.

Baroness Ashton of Upholland: We have debated this amendment for two hours and 14 minutes. I begin by saying that I have been looking forward to our debates, and I have not been disappointed. I say that because assuming that we can keep the temperature down just a little, this debate is already proving to be a fascinating opening to our consideration. I want to say something about how I intend to approach this because the noble Lord, Lord Howell, was good enough to say how he would do so at the beginning of his remarks. I have had the privilege of talking to many noble Lords about the course of our consideration, and I hope that in the six days of debate we will have the opportunity to do what the noble Lords, Lord Howell and Lord Hunt, in particular, but other noble Lords too, have asked for: as far as possible and led by the amendments that have been tabled, we should go through the Bill line by line. Doing so will allow us on many occasions not only to have high-quality debates about particular issues, but also to question, as noble Lords have begun to do today, the issues that lie at the heart of some of the divisions between the different Benches of this House.
	That comes down to questions such as: what this treaty amounts to when considered in detail; how different it is, or not, to the constitution that was put before; whether that should have been put down, as my noble friend Lord Kinnock, who is not in his place, said, as a constitution in the first place; or as we look further forward, whether that should have led to a referendum based on the genuinely held view of some noble Lords that that was a commitment which should be kept to because there is no fundamental difference. I hope that scrutiny of the treaty will bring forward all the issues of detail that will enable those noble Lords who have not yet reached a decision to do so. I have to say that all the contributions I have heard today reflect the strong views held by noble Lords in one direction or another. None the less, it is important that our colleagues who do not have strong views have the opportunity to hear what is good or bad about this treaty in other people's minds and eyes.
	At Second Reading I made a promise to the noble Lord, Lord Howell, that I intend to keep. I have 50 pieces of paper covered in quotations, many from leaders of other European states and from all over the place. I do not intend to use them. I intend to quote only Members of your Lordships' House and another place. I pay great tribute to, and will use substantially, the reports of the European Union Select Committee in another place, the committee in your Lordships' House and the Constitution Committee. All of these reports have been quoted and, alas—as my honourable friend Michael Connarty said in the Commons—misquoted from time to time. If I can encourage noble Lords to stick to using those we know and those who can stand before us and tell us what they meant when they wrote what they wrote, I think our debates will be substantially better. I am not going to resort to quotations from a variety of leaders and I would welcome other noble Lords' agreement that that is a substantially better way forward.
	For the purpose of this short contribution, I am going to concentrate on the amendments before us. I am not doing that in order to run away from the bigger questions.

Lord Forsyth of Drumlean: I am just taking in what the noble Baroness said. Is she seriously suggesting that we should have a debate about this treaty in which we do not quote from Prime Ministers, leaders of Europe and Brussels? The only conceivable explanation I can have for her suggesting that is because so many of them have said things which are in direct contradiction to the Government's line.

Baroness Ashton of Upholland: The noble Lord is completely and utterly wrong in that. The week before last, during the Recess, I spent three days in Brussels talking to a variety of people and having many conversations about the treaty. Obviously I have had the opportunity to obtain information through our Foreign and Commonwealth Office and my fellow Ministers about the views of many others. My point was meant to be more substantial than the one for which noble Lord has given me credit.
	I do not believe that it will necessarily help our colleagues and other noble Lords who are looking at this debate and looking at the substance of the treaty if all that happens is that we read out quotes or parts of quotes from a variety of different leaders who are not here to explain the context of what they said or, indeed, what happened next. If other noble Lords choose to do that, it will be fine. I was merely saying that, for my part, in looking at the questions that are to be raised in this Committee stage of the debate—in delving through, at the request of the noble Lord's Front Bench, a line-by-line examination—I feel it much more important that those who have scrutinised the treaty as it stands now are best placed to be quoted in terms of what is being suggested within it. If the noble Lord, Lord Forsyth, wishes me to revert to my 50 pages of quotes, I shall be very happy to do so, but I am not sure that noble Lords will find us trading quotes any more helpful than listening to noble Lords debate the issues from their knowledge and background. That is the point I wish to make.
	As I said, I intend for today's purposes to focus on what is in this group of amendments. That is not to shy away from the broader discussions that have been raised. We were in danger of moving into a second Second Reading debate, but there will be many opportunities to discuss the issues. One can see from the amendments that have been tabled that there will be many opportunities to look at the issues about which noble Lords are very concerned. I expect that on one of our days in Committee there will be a particular focus on the question of a referendum. The noble Lord, Lord Blackwell, has already tabled amendments, for example, and there may well be others by now. This is a consequence of the last clause in the Bill, where the commencement date will give us an opportunity to debate the issue.
	I am not moving away from that but I am not prepared to turn it into a Second Reading debate. Noble Lords who did not hear what I said at Second Reading are very welcome to read it; it was an extraordinary debate of 12 and three-quarter hours. Today I want to begin the process of dissection; of looking at the individual issues that have been raised. This is notwithstanding the strength of feeling—which I absolutely understand—of noble Lords who wish to raise other issues as well.
	In this group of amendments—I am grateful to all noble Lords who have talked to me about groupings and so on, and we will continue that dialogue, too—we are challenging what we saw in the 1972 Act, which is about the primacy of European Union law. When we gave effect to that in 1972, it was already well established. It was something that those involved at the time recognised was important, in order to ensure that we had uniform application of the operation of the single market. If we undid that underpinning point about primacy from 1972, we would fundamentally and radically change our relationship with Europe; indeed, we would change the way that Europe operated.
	Parliament, of course, remains sovereign. It can choose to repeal the 1972 Act and the application of the primacy of European Union law. There may be noble Lords who wish it would do that, but the consequence, in my view, is that that would have to go hand in hand with leaving the European Union. The noble Lord, Lord Pearson of Rannoch, agrees with me on that, and indeed may agree that some noble Lords would wish to see that happen. Let us be clear that that would indeed be the logical outcome of moving away from the current position.

Lord Pearson of Rannoch: I hope that the Minister did not misunderstand me. I was not saying that if we were to have a referendum on this treaty and for any reason we were to reject it, that would lead to the United Kingdom leaving the European Union. When we come to the debate on the referendum, my arguments will be precisely the opposite: we would stay in the European Union, and we would be stuck in it for a very long time.

Baroness Ashton of Upholland: The noble Lord was not saying anything; he was nodding. By that, I thought he was agreeing with what I said—that if you move away from the 1972 Act and the primacy of European Union law, the logical conclusion would then be to leave the European Union. I am deliberately talking not about the referendum but only about the amendments as they stand.
	The Lisbon treaty does not alter anything in that area. When we come on, as I hope we will, to look more closely at what is proposed for the role of national parliaments, we will see that that role is strengthened. Noble Lords of all persuasions should welcome that because it gives parliaments a direct say in EU law-making for the very first time. I have no doubt that some noble Lords will argue that they wish to see more, or perhaps less, of that and they will want to understand what it actually means. There is a lot to do, particularly in talking to our European Union Select Committee about how we make that a proper reality in a way that both Houses of Parliament would wish. None the less, that measure is there, and I hope we will have good and interesting debates on it.

Lord Owen: The Minister said that we would be doing this for the first time, but that is not the case. The European Assemblies Act 1978 made it clear that control would be by primary legislation in this House. The proposal from the Government is merely a single vote in both Houses.

Baroness Ashton of Upholland: The noble Lord and I may be talking at slightly cross purposes. I am suggesting that, within the Lisbon treaty, the European Union for the first time is making it clear that it wishes to see direct involvement from national parliaments. I think the noble Lord is referring to what happened in 1978 from the UK perspective of its relationship with the European Union. In that case, neither of us is wrong, but I am saying that from the EU's perspective it is the first time that the EU has offered this. When it was in Brussels it was clear that this was an important part of current thinking about how, if the treaty is ratified, it could be made a reality when it is implemented.
	I shall say something briefly about each of the specific amendments in turn. What we have done in Clause 1 is standard practice. Other noble Lords, with far greater experience than I, have talked about specific experience of putting together the beginnings of a Bill. We have defined the treaty in standard, neutral terms. I will not repeat many of the arguments that have been made by noble Lords about the purpose of Amendment No. 2. On one hand, it is argued that the wording would signify the reality; on the other, one could argue that the wording would be there in order to ensure that we raised the issue of the constitution in such a manner that it would lead to a referendum. There are different views on that. None the less, we believe that the wording is unnecessary and, indeed, inappropriate. We on the government Benches believe that the treaty of Lisbon does not amend or alter our current constitutional arrangements with the European Union and will not have any fundamental implications for the constitutional position of Parliament.
	I turn to the Constitution Committee report, on the basis of what I have already said about those I shall quote. On the impact of the Lisbon treaty on the European constitution, it says:
	"the Lisbon treaty would make no alteration to the current relationship between the principles of primacy of European law and parliamentary sovereignty",
	as I, too, have said—in fact, it strengthens the role of national parliaments.
	When I look through that important report, it is difficult to find anything about which there are serious concerns. There are interesting points that the Government must respond to, and we aim to respond as quickly as possible so that those responses can form part of the debates we have in your Lordships' House. However, when the committee looked at fundamental rights, accession to the EU, the European Convention on Human Rights, citizenship and competencies, it concluded that there were no significant implications for the UK constitution. That conclusion comes from an important committee, and I am sorry that the noble Lord, Lord Goodlad, is not in his place. I hope that noble Lords who have not yet had the chance to look at the report will do so. It raises questions for the Government, of course, but it is interesting in terms of that important principle.
	Amendment No. 125 would undermine the application of the principles of primacy and direct effect. As I have said, they are long-established principles that were there before we joined the community; principles that are fundamental, I argue, for the effective and uniform application of laws across all EU member states, and that remain unchanged by the Lisbon treaty in any way. I have already indicated that it is for Parliament to decide if it wishes to repeal the Act. By passing the Act, Parliament, not the EU or the European Court of Justice, decided to accept the obligations of European Union membership—or, as it was then, EEC membership—for the United Kingdom. We have continued to exercise our sovereignty in passing the legislation necessary to implement every amending treaty. Parliament remains free to repeal the treaty, but let us be clear what that would mean—it would mean leaving the European Union.
	Some noble Lords have indicated that they remember being part of the discussions and debates in 1972. I am going to quote the then Solicitor-General, now the noble and learned Lord, Lord Howe of Aberavon, who unfortunately is not in his place. I do not think he will mind me repeating what he said then:
	"It would make a nonsense of the necessity for Community law to have the same effect in every member State if the United Kingdom, any more than any other member State, could choose by national law to override what it did not like. The principle of Community law having precedence throughout the Community is one that operates for the mutual benefit of all member States".—[Official Report, Commons, 13/6/72; col. 1317.]
	I quote the noble Lord because I could not conceivably have put it any better. His words from 1972 echo through the decades, describing precisely why it is important to ensure, if you have an agreement and you implement the law, that it is implemented in the same way throughout the Community.
	Amendment No. 126 from the noble Lords, Lord Willoughby de Broke, Lord Stoddart and Lord Pearson of Rannoch, adds a further sentence—

Lord Lamont of Lerwick: When the Minister says that Community law must be implemented in the same way in every state within the European Union, how does that apply under the arrangements the Government are defending whereby the protocol relating to the Charter of Fundamental Rights would apparently shield non-UK citizens who are resident in this country? They would presumably find that they were not subject to the Charter of Fundamental Rights in the same way that they would be in their own country.

Baroness Ashton of Upholland: The Charter of Fundamental Rights does not create new laws; it does not say that there is a justiciable reality for people in this country that is different for residents or citizens. With luck, we will have a debate later today that will take us into the whole question of the Charter of Fundamental Rights, the purpose of what we have done with the charter and what it does and does not do. There is no contradiction in what I have said regarding the implementation of EU law, but we will discuss that in greater detail later.

Lord Blackwell: Perhaps I may clarify what the noble Baroness the Lord President is saying. My Amendment No. 125 refers solely to the new powers created by the treaty of Lisbon. If she is not prepared to accept it, is she saying that we are giving the European Union the power to decide whether laws and actions of the UK Government are compatible with the new objectives that are built into the treaty by the treaty of Lisbon—that of a social market economy, for example? Is that the import of what she is saying, because that change is introduced by this treaty?

Baroness Ashton of Upholland: I am not saying that. We are a part of the European Union. The noble Lord described it as if it were something over there. I am saying that when a decision is made by 27 member states to move forward on a proposition, and when that proposition comes to be implemented across them, the European Union law that applies to that has primacy. It does affect what we do in our own domestic legislation per se, except where the EU legislation covers subject matter where we have agreed that it should. We will look at that in greater detail. The noble Lord's amendment would take away what we accepted in 1972—I have already quoted the noble and learned Lord, Lord Howe of Aberavon, speaking at that time—namely, that if one is going to belong to a group of countries collaborating on aspects of economic or other policy, where one agrees to work in a particular way, that law must apply. That is the difference between what the noble Lord proposes—we would in effect take away what we agreed in 1972—and the current position.
	Noble Lords have tabled an additional amendment, the purpose of which would be the same. We are a member of the European Union; we derive practical benefit from it; and we are bound to implement the law. That position has served us well over the decades and, for these purposes, will serve us into the future. I hope that the noble Lord will feel able to withdraw his amendment on that basis.

Lord Howell of Guildford: I thank the noble Baroness the Lord President for setting out frankly and openly her view of how we should proceed with the amendments and how we should develop the debate as we go along. I shall form a good—I was going to say unholy—alliance with her in avoiding quotation fatigue, which would bear us all down. In fact, I shall adopt the approach of the Japanese towards their finest treasures and antiquities, which is to bring out one a month and to admire it. So, during the debates, I shall bring out one superb quotation each time to underline our devastatingly strong case on these matters.
	The noble Baroness broke her own truce by quoting the excellent report of the European Union Committee.

Baroness Ashton of Upholland: I did not. I would hate for the noble Lord to think that I immediately broke my truce. What I think I indicated—I ask noble Lords to nod if that is what they thought I had said—is that I would quote only Members of your Lordships' House or of another place and the three committees: the Constitution Committee, the European Union Committee in this place and the European Scrutiny Committee elsewhere.

Noble Lords: Hear, hear!

Lord Howell of Guildford: If your Lordships settle for that bargain, I shall do so as well. I shall quote from the excellent report of the House of Lords Constitution Committee. It states in its conclusion, which is in heavy black type, that part of the TFEU treaty will,
	"inevitably have constitutional implications. In practice, much will depend on how the Government choose to exercise the opt-ins they have negotiatedWe conclude that the importance of how the opt-ins and opt-outs are used is such that Parliament must be fully involved in their use".
	It also quotes with approval one of its witnesses, who, talking about the changes to the TFEU, said that the reform clearly implied "fundamental constitutional change". Those statements are in black and white, so the noble Lord, Lord Tomlinson, is quite wrong in saying that none of the reports from your Lordships' House supports us or that their conclusions are the opposite of what we are saying: they are right in line with what we are saying. They are right in line with the fact that there is a constitutional significance which merits a change in the wording about constitutional arrangements in the terms which we have set out. That is a matter on which we will probably not agree, but at least let us have the facts either side aligned; they cannot be gainsaid.
	Of course the amendment was intended to be a rather narrow point; we were trying simply to bring home the observation, or the improvement, to make the Bill rather more honest goods, and state more clearly what it is about. Inevitably, the debate went wider. Neither I nor the noble Baroness can control how a debate goes—thank goodness—in your Lordships' House, and we wandered off into wider things. I very much agree with the noble Lords, Lord Williamson and Lord Willoughby, who both reminded us not to become too loaded with jargon and insider's talk. To many people, the very word "constitution"—I think that the noble Lord, Lord Lester, was on to the same point—is strange. For many people, it refers to body-building exercises at a health club on a Friday evening or, for some, a doctor's term in a medical remedy. So we have to be very careful to adopt the right language in our debates. However, we were making a narrow point. Some speakers chose to go very much wider, and we drifted off into the referendum issue, which we shall debate later. I listened with great interest to the noble Lord, Lord Kinnock—his very voice brought back memories of past battles—who asked where we stop with referenda. I shall simply leave him with the question whether he put that question to the former Prime Minister, Tony Blair. If so, what was the answer? I shall be fascinated to learn at some stage what it was, because it was the former Prime Minister who recommended a referendum.

Lord Kinnock: I can make the response immediately. On his terms, we agreed to differ. I am irreducibly against robbing Parliament of the responsibility; he was disposed to take a different view on what he then regarded to be a constitution. His view has since been repaired in accord with the great change that has taken place in the document that will partially determine the way in which the EU conducts itself.

Lord Howell of Guildford: Nothing that the noble Lord says surprises me in the very slightest degree. I am sure that views have evolved and changed in every direction, sometimes at a bewildering speed which is quite hard to follow.

Lord Stoddart of Swindon: Does the noble Lord agree that no referendum can take away the right of parliamentary decision? We are a parliamentary democracy. The idea of a referendum is to advise Parliament. Parliament should perhaps think very carefully before rejecting that advice, but referenda do not undermine the principle of parliamentary democracy.

Lord Howell of Guildford: I do not want to enter that debate now, but it is probably correct that referenda, as the previous Prime Minister, Mr Blair, obviously believed at the time, are in certain circumstances justified in giving the people a say before Parliament reaches its final conclusion. There is a lot in what the noble Lord said.
	The noble Baroness the Lord President began her speech with a major point about the primacy of EU law. It is correct that it was not in the Rome treaty; it evolved from the diktats and judgments of the European Court over the years, and was then given a boost by our own European Communities legislation when we joined the Community in 1972. This Bill and this treaty extend the powers of the ECJ enormously because of the collapse of the third pillar. Suddenly, they extend over a very wide area.

Lord Lea of Crondall: Would the noble Lord like to reconsider his use of the word "diktat"? The European Court of Justice has been there since Ted Heath onwards. Has he always thought of it as giving diktats?

Lord Howell of Guildford: The noble Lord is quite right—it is the wrong word. It slipped out. I should not have used the word diktat; I meant "judgment". I tried to correct myself, but not quickly enough for the noble Lord, who is very sharp on these matters. But the point is that there is a big extension of the area—

Lord Pearson of Rannoch: Surely a judgment against which there is no appeal is a diktat.

Lord Howell of Guildford: Another very relevant point. Perhaps the right word that we are groping for is "ruling". What I am trying to get to is that the outcome of the rulings of the European Court of Justice and the powers of that court, which now extend over a very wide range of bodies, as they never did before, with its powers to impose large fines and many other penalties, are vastly extended with the collapse of the third pillar.
	I shall not go into the points that the noble Baroness raised about national parliaments. There is room for a very wide debate about whether in practice there is any enlargement of the role of national parliaments at all under this treaty. I know that the intention was there but whether it works in practice is something that we shall discuss at another time.
	The noble Lord, Lord Lester, implied that I was in favour of a constitutional court. I am not. I was merely saying that other countries had those courts and that as we did not have one it was all the more vital that we underpinned our systems of parliamentary accountability to uphold our constitution in the most effective ways.
	The core of the issue that we have been debating is the "previous treaties" issue, embodied in the interventions of the noble Lord, Lord Hannay, and the noble Baroness, Lady Symons, who raised—as has often been raised before—the question why. Why are we worried about this now and why are we trying to amend this treaty? Why are we critical of many aspects of it and why has the party for which I am speaking argued in favour of a referendum when we did not do any such thing for previous treaties? I gave one answer—the straw theory, as the noble Lord, Lord Hannay, put it. Of course, it does not have to be a straw by itself; it can be one in a very large bundle, as it is in this case and as the noble Lord, Lord Harrison, perhaps recognised. One more very large bundle is the thing that can sink the poor, wretched camel.
	There are other substantial arguments, and the noble Lord, Lord Owen, reminded us of a very good one—namely, that after the Maastricht treaty an election was held. There was a general election. Are we being offered now another general election on this issue? If so, I think that my party would be quite happy to proceed.

Lord Anderson of Swansea: Is the noble Lord seriously suggesting that the 1992 election was held on the issue of Maastricht?

Lord Howell of Guildford: I am saying that the people had an opportunity at a general election to discuss and debate it very fully. Also, as my noble friend Lord Lamont reminded us, a referendum was on offer on the euro, although luckily, so far, it has not come to that. Later on we will want to know whether we can be sure that this Government, if they are still in office—which I do not think that they will be—will offer a referendum on the euro again.
	It was a narrow point that we were trying to debate this afternoon. We are simply arguing that the Bill should be honestly described. The noble Lord, Lord Anderson, made much of the point that the other people of Europe do not agree with us—and I am not sure that he is right about that either. In fact, the latest independent poll from Open Europe found that 75 per cent of all people in the EU want a referendum on any new treaty that gives more powers to the EU. It also found that in the UK 83 per cent would want such a vote to be held. The majority in all 27 countries would want a referendum. So we are not quite as isolated as he makes out.

Lord Anderson of Swansea: With respect, that was not the point that I was making. Since the change of policy towards the European Union by the Conservatives, there are no natural bedfellows within the European Union, as evidenced by the problems of the European People's Party in the European Party.

Lord Howell of Guildford: The noble Lord makes the wonderful universal error of confusing Governments and elite groups with the people of Europe, who, as we found with the last treaty, suddenly took rather a different view to that of their Governments. That is a very deep point and one that we will come back to again—whether we are talking about the Europe that elites want or the one that the people want. I think that they are very different.
	The question of constitutional significance is at the centre of our amendment. As we have been reminded, Mr Straw, the previous Foreign Secretary—now, I think, he is the Lord Chancellor—said that if it was a question of a Foreign Secretary or President being introduced, that would be constitutional. This Bill does that. Someone else said that if there was a vast increase in ECJ powers that affected individual citizens, that would be constitutional—and this Bill does that. In a way, I rather admire those who have spoken in opposition to the amendment this afternoon, because I think that they are on the defensive. They are besieged in the Alamo fort and are fighting very hard by simply denying the facts and the truth, which everyone else in the wider world recognises. Every commentator and most national leaders throughout Europe know perfectly well what we are talking about.
	Other issues were raised in the debate. The "Ode to Joy" has words by Friedrich Schiller and music by Beethoven. I have nothing to add, except that it is a wonderful sound. We can all enjoy it without the benefit of elaborate new centralising laws and treaties. We do not need a law to listen to Beethoven, thank you very much.
	So we have come to the conclusion that it would be extremely wise to add these words now. As the noble Lord, Lord Alton, very wisely reminded us, there is a very great danger of isolating ourselves by our refined language and ideas from the deepest and best feelings of the British people and the people of Europe. That is an issue to which we will return. In the mean time, having noted the depth of feeling and the strength of our argument, which I think has swept right over the protestations and defence of the Government and the silent, or nearly silent, Liberal Democrat party, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 3 not moved.]
	Clause 1 agreed to.

Lord Howell of Guildford: moved Amendment No. 4:
	After Clause 1, insert the following new Clause—
	"Treaty of Lisbon: clarifying arrangements
	(1) The Prime Minister shall, within no more than six months of the passage of this Act, lay before both Houses of Parliament a statement, detailing—
	(a) those elements of the constitutional arrangements in the Treaty of Lisbon that required further negotiation and clarification;(b) any other Articles or elements of the Treaty of Lisbon that required further negotiation and clarification, subsequent to 13th December 2007;(c) what draft proposals he, or any other Minister of the Crown, has agreed with other EU members in relation to matters included in paragraphs (a) and (b) above;(d) what aspects of the arrangements envisaged in the Treaty are still not agreed and remain to be resolved in negotiation within the EU.
	(2) In preparing such a statement, the Prime Minister shall have particular regard to—
	(a) the powers and duties of the President of the European Council;(b) the detailed role of the President of the European Council and his relation to the Heads of Government of the nation holding the rotating presidency of the EU;(c) the powers and duties of the EU High Representative;(d) the detailed role of the EU High Representative and his relation to the Secretary of State."

Lord Howell of Guildford: Noble Lords will forgive me if I catch my breath after the last debate.
	Our concern here is with the issues left over from the treaty negotiations, which still remain to be resolved, and how on earth they should be handled by our Houses of Parliament. We have learnt recently from a presidency document that an immediate range of issues is to be decided, such as the salary and role of the proposed EU president—and we will have many more amendments later on the foreign policy aspects of that matter; on the powers of the new Foreign Minister and his diplomatic service; on how those things fit together with a rotating presidency system; on the development of defence co-operation, which is a crucial matter; on the new powers to be handed to the European Police Force, Europol, and the prosecution service, Eurojust; and many other matters as well.
	In the words of the Economist, dozens of questions are left unanswered by the treaty and many of them will give rise to fresh debates in future about the whole shape and nature of the Union. A misunderstanding needs to be cleared up in Ministers' minds about the whole nature of the European process. The EU is not, and never has been, a fixed arrangement with nicely delineated powers about who does what. Relationships are in perpetual flux. There is no single treaty that can settle matters for all time, as some enthusiasts seem to yearn for. One hears people say, "This will be the final settlement" and, "This will be the ultimate solution for Europe". That is the language of fantasy because that will never happen. I think that that explains why President Sarkozy is already talking about future integration and a working party that he wants to get started about the next stages in the integration and formation of the Europe that he wants to see.
	Aside from that, the EU project—before it the EC project and before that the EEC project—has always proceeded by informal understandings and quiet arrangements. Some have condemned these as being by stealth; others have said they are simply moving around the political obstacles that would otherwise have stood in the way. Anyone who has read a very interesting book by Keith Middlemas—his brilliant book subtitled The Informal Politics of the European Union—will know that is what has happened, is happening and will continue to happen. That is the way the European system is going forward. We want it to go forward. in ways that are different from the centralisers and the old guard collectivists who still dominate the thinking of many people outside—and many of your Lordships, I fear—and on the left in European politics.
	Parliament really should know what the new president's powers are and what his position is. There is to be a new Foreign Affairs Council as well as a General Affairs Council. It is very hard to see how that will work out. Will the new president sit on both councils? Will he chair both? Will he share a chair, which would be rather uncomfortable, with the rotating head of government president every six months? If the General Affairs Council is no longer to look at world affairs, what will the heads of government do when they meet if all the foreign policy and world issues are left to the new Foreign Affairs Council? Who will broker and help to resolve the endless differences between member states on external issues—not on all issues but on a great many—and on the EU's role in the world, which makes so dangerous the reliance on the EU partners to voice and promote our own interests? These are crucial questions for our own affairs, which we must have clarified.
	We need proper parliamentary accountability in all this. We want to ensure from the start that Parliament is told and given a proper chance to debate and approve or reject what is likely to happen, and, indeed, what has been already agreed to by the treaties that Parliament has been asked to sign up to.
	We have tabled amendments as proposed by the Lords Constitution Committee. We agree with its view and it agrees with ours. They would ensure that all the opt-in and opt-out activities, whether under previous treaties—I emphasise that—or under this one, are put to Parliament by the Government for approval. This is the first of a series of proposed changes aimed at maintaining and enhancing parliamentary accountability over what is being done in our name. They do not change the treaty but they control part of its impact, or should do so. Therefore, the Government should, frankly, accept them. Indeed, I have written here "So should the Liberal Democrats", to which I just have to add, "some hope". I beg to move.

Lord Anderson of Swansea: The noble Lord made a number of important points. It is absolutely correct for him to say that there are a number of blurry edges and unanswered questions. He very properly mentioned a number of them, including the salary, the role of the proposed EU president and of the External Action Service, and defence co-operation.
	The noble Lord's argument for a six-monthly report is rather overtaken by the important points he made that the relationships are in any event in a state of perpetual flux. He talked about the informal politics of the European Union. I am sure that he would agree that in any constitution there is no settled position, like the final struggle in the great "Internationale". There is no final struggle. All constitutions are by nature dynamic; none are in fact static. We may be interested in parliamentary accountability, but that will not be done in one six-monthly report—it will be a continuous process. That is the important point about this. There will be constant modifications. We will be part of the debate which leads to those modifications. We are part of the European Union. We do not have bilateral relations with the European Union; it is part of ourselves.
	Much of the development will depend on matters such as the personalities of the individuals who are there, the external matters that confront Europe and the challenges we face—for example, matters in the External Action Service, such as the pressures on our own budget in terms of the foreign diplomatic service and the extent to which we want to co-operate. That important point has been made in earlier debates by the noble Lord, Lord Wallace. There will be continuous modification. It is therefore impossible to reach an end-point.
	It is important that we ensure an active role for national parliaments. I have acknowledged that there are questions about how the proposed role will work out in practice. In conclusion, the key fact is that we must ensure parliamentary accountability. There is a moving target and therefore there should be a continuous form of accountability.

Lord Wallace of Saltaire: I preface my remarks on the amendment with a few remarks about how we conduct ourselves in Committee. We are in Committee. I hope that we will now be able to make progress in Committee style. The noble Lord, Lord Forsyth, is not in his place, but I think that he should have carefully read and absorbed the words of Standing Order 33 about asperity of speech. I felt that he was not only making a Second Reading speech in Committee, but raising the level of passion beyond what we should be doing when attempting to follow the words of the noble Lord, Lord Howell, and examining the Bill—that is what he said, but it has to be the treaty and its implications—line by line.
	Perhaps I should also say a little about the intentions of these Benches. We strongly support continuing scrutiny of our engagement in the European Union. That is what this Parliament should be doing and what this Chamber has been doing rather well, and I hope will continue to do. We are very happy with the detailed work which committees of this House have conducted in examining the implications of this treaty. That is a little different from what we do, sometimes rather more messily, on the Floor of the Chamber.
	I feel that the amendments are very unconservative. Conservatism, as I learnt about it, is about practice and pragmatism but accepting that politics flows; it is not about theories, structures and absolutes. It seems to me that the noble Lord, Lord Howell, is asking us to know exactly where we will end up before we have started. He says that what we need from this is proper parliamentary scrutiny. However, I refer him to the very wise words that he used when we discussed the previous amendment, when he said that he knew the intention was there but whether it worked in practice was another matter. I agree strongly with that remark, which he made about parliamentary scrutiny, but it is also true of how these new procedures will work. We do not yet know how the President of the European Council will operate. I think this is a better procedure for an EU of 27, moving from a situation in which for six months the Prime Minister of Malta will chair the European Council and then the Prime Minister of wherever else it may be will chair it.
	This is a useful improvement for an enlarged European Union. The United Kingdom is in favour of the enlargement of the European Union and that has implications. Part of the argument for this treaty is precisely to deal with a European Union which has grown in the last decade from 15 to 25 to 27, and some of the adjustments are to allow for that. But how these various new adjustments will work in practice depends on who is appointed and how well they work with others. We do not yet know that. We have to avoid the politics of "stop the world, I want to get off" in this. Britain is involved in the European Union. Through our officials and sometimes through our Ministers, we play an active role in shaping the European Union. I very much hope that we will continue to do so. When this treaty is ratified, I trust that our Government—getting over their great hang-up about what Rupert Murdoch wants us to do—will play a very active role in shaping where we go from here. I hope that the Conservative Opposition will not spend too much time bumping along behind, trying to pull them back at every stage, so that we can continue to have active scrutiny and an open and honest debate at last about Britain's engagement in the European Union. For those reasons these Benches do not support these amendments.

Lord Blackwell: I support these important amendments. As a member of your Lordships' Select Committee on the European Union I was fortunate enough to discuss some of these issues when we visited Brussels. As other noble Lords said, it is clear that there is huge uncertainty and work still to be done on turning some of the institutional arrangements that are described in this treaty in very outline form into practical and settled arrangements. That matters, because the way in which those institutional arrangements develop has a profound impact on the way in which Europe will operate and the kind of constitutional settlement that it puts in place.
	I want to dwell in particular on the relationship between the various presidents. We should remember that three presidencies will be concurrent in Europe: the new term-elected President of the European Council and the existing President of the European Commission, and there will still be the rotating presidency of the Council of Ministers. What is not at all clear is how those three concurrent presidencies will interact. One model would maintain that the national presidency—the rotating six-monthly presidency —should still be the predominant presidency as it represents the member states, and that the others should be the servants of the nation states with the president of the Council merely orchestrating the agenda as a kind of chairman of committees and the President of the Commission continuing to manage the legislature. Another view states that what we are creating here is more like the tiers of a presidential state where the president of the Council, who is elected for a longer term, acts like the President of France or the President of the US with a Cabinet around him and sets the agenda, and that the President of the Commission becomes in effect a First Minister or Prime Minister as the head of the Executive, in the same way as the Prime Minister of France relates to the President of France. In that model the rotating national presidency is merely there to arrange the venue and clean the floors.
	How this turns out is a matter of substantial importance in the model of Europe that we are building. It is no accident that it is not clear, because there are differing views on what model different members of the European Union and different members within each delegation might want, as was made clear in the Select Committee's discussions. It is fundamentally significant that this House knows whether what is envisaged is indeed a French-type model of a president of Europe and a Prime Minister, with the rotating presidency kicked into the sidelines, because it has an impact on the constitutional settlement that we have just been discussing. In saying that this amendment does not go far enough, my reservation is that I think we ought to have this settled before the House and the country are asked to agree to this treaty. That ought to be one of the things we consider as we go through this debate. We should as a minimum ask for a report-back six months later to ensure that we have clarity on this.

Lord Anderson of Swansea: The noble Lord talks of the matter being settled, but does he agree that much will depend on the personalities who appear? For example, if the President of the Commission were a Delors and the other president were a former Prime Minister of Luxembourg—I have great respect for Luxembourg—there would be a certain dynamic between those two and the situation could be reversed. So how can it be settled? How can we know ultimately what that relationship will be?

Lord Blackwell: The noble Lord's intervention illustrates exactly the danger of not having it settled. The relationship between the President of France and the Prime Minister of France does not depend on which individual is elected to which office. Those offices are settled. If we have a Europe where the individuals who take those places can land-grab and turn the European Union constitution to their advantage, that is a very dangerous constitution for us to sign up to.

Lord Owen: I seek clarification. I am afraid that I am not up to date with the procedures, but a report on European affairs used to be made to Parliament every six months. It seems to me that that vehicle would incorporate all this. More than most previous ones, this treaty has a very large area of important unclarified material. It is perfectly possible to take the view which has been argued, particularly by the noble Lord who served a very useful purpose as chairman of the foreign policy Select Committee in the House of Commons. However, you cannot narrow these things down; they are matters of practice.
	This is a view with which I have a good deal of sympathy but, when looking at amendments to this legislation, the real problem, apart from these general well-meaning reports back to Parliament, is how to clarify the actual meaning of these words. This relates to a later amendment that I have tabled.
	When she replied at Second Reading, the noble Baroness was very clear that there was no problem with the commitment to allow the European Court of Justice to adopt a new role in the European Council. In my view that is quite a big step and we cannot change it. But there is also a commitment in the legislation that the European Court of Justice will not involve itself in foreign affairs. However, the President of the European Council is definitely involved in foreign policy. The noble Baroness has the best of intentions as regards these commitments but I assume she means that, when dealing with foreign affairs, the President of the European Council will not be subject to the European Court of Justice and that will still be an area in which he will effectively be exempt. These wordings are very important. I hope that the Minister will put on record exactly the limitations on the European Court of Justice. In listening to the earlier debate, this is the issue that worries many people; the capacity of the European Court of Justice to expand the role of the European Union powers beyond that which the House of Commons and the House of Lords at various times under different Governments have fought to be the limits.
	It is therefore really the main focus of parliamentary scrutiny and debate to set limits. I am sure that the honourable gentleman agrees—sorry, I mean the noble Lord; I am used to the other place, and seeing the same face makes it even harder—that it is important if we can to nail down these areas, and I particularly draw attention to the European Court of Justice. I ask the noble Baroness in preparing for these debates if she could be as precise as possible about the Government's understanding of the role of the European Court of Justice and where it is constrained and where it is not constrained. That would be very helpful.

Lord Tomlinson: I am very grateful to the noble Lord, Lord Owen, because he raised some interesting questions; but they are so interesting that they would not be covered by the amendment. The amendment is headed:
	"Treaty of Lisbon: clarifying arrangements",
	but it does not clarify most of the important questions that were just raised by the noble Lord, Lord Owen. We have just agreed that Clause 1—a very simple clause of three lines—should stand part of the Bill, and we now have "clarifying arrangements" adding a further 21 lines after Clause 1, the total effect of which is to create more confusion, because those lines will raise more questions than they answer.
	The situation is very clear—that we as Parliament hold our Ministers to account when they come back from Council meetings, and we will have the opportunity to ask every one of the questions that are listed in the so-called clarifying arrangements, plus any others that we have the ingenuity to think up. The amendment is unhelpful, and I will not support it.

Lord Stoddart of Swindon: I—

Lord Pearson of Rannoch: The noble Lord, Lord Tomlinson, has just epitomised the project of European Union; it is all right if we ask these questions when Ministers have come back from Council meetings after matters have been decided and there is nothing that this Parliament can do about it. That is one of the central complaints of the growing number of people in this country who do not want to continue with this project.
	This is a very good amendment, except that I am afraid that, like the noble Lord, Lord Tomlinson, it shuts the stable door after the horse has bolted. It is not helpful to have a report in six months' time detailing these matters. We want the answer to all these questions before your Lordships reach a decision on the referendum and before the people are invited to vote on a referendum, if we reach that happy conclusion.
	When the noble Baroness replies, could she answer some of the rumours, doubts and questions that are surrounding the Eurosceptic community in this country? One of those important rumours is that quite a lot of initiatives have already been agreed, or nearly agreed, and they have been put in the drawer of the Council in Brussels and hidden away from the people, particularly the British and the Irish people, who will have a referendum on this new treaty, until the treaty has gone through. Is there any truth in that?
	Also, has an understanding or agreement been reached that no fewer than 10,000 British troops will in due course be committed to the new European army with its independent command centre in Brussels? It would be very good to have that completely denied. If not, have any troops been agreed?
	Another interesting suggestion—

Lord Wallace of Saltaire: That is an interesting statement. Could the noble Lord, before we discuss the CFSP and defence dimension, provide noble Lords with the exact source of the statement that he has just made?

Lord Pearson of Rannoch: Of course. At the moment, I was merely posing a question. When we come to that, I will be happy to provide the noble Lord with my source.
	Another rumour is going around of borderless healthcare. Has that been agreed and put in the drawer? Is there any prospect of this treaty leading to that? The first of those suggestions is something of an anathema to what the noble Lord, Lord Wallace, would call the right wing in this country. The second suggestion of borderless healthcare, where we could all wander over the health systems of Europe checking in as we wished to avoid the appalling state of the National Health Service in this country, might appeal to this country's middle classes, but I understand it is fiercely opposed by the trade unions.
	The other question that I wish to put to the noble Baroness is on tax. Indirect tax is covered by the treaties of Rome, but direct tax is not covered in the present treaties as they stand. That has not stopped the Court invading corporation tax or reaching over 120 judgments in favour of national companies—

Baroness Ashton of Upholland: I just want to help the noble Lord. I can give the source; it is the Open Europe briefings. I have them all, and they include the point about the contribution of 10,000 troops. It is completely untrue, but it is in that briefing.

Lord Pearson of Rannoch: At the moment, I cannot remember whether that was my sole source, but I will come back to it. That rings a bell. We would like to know, more than that, what further arrangements there are for military integration and the advance of the French dream in that area.
	I think I was dealing with tax. Indirect tax is in the treaties; direct tax is not. I think I was saying that the Court has already invaded corporation tax to the detriment of national exchequers and to the benefit of finance directors and shareholders of international companies. I gather that Mr Barroso has been in Ireland recently, assuring the Irish that they need not worry that this treaty will lead to any change in their tax system, which has done so much to improve the state of their economy.
	Those are the sort of specific questions that we would like answered now. I put it to the mover of the amendment that it would be very helpful to have the answers to all these questions before we vote on a referendum and before the people vote on it. While I am on the subject of the noble Baroness answering questions, I was remiss when she finished her answer to the previous amendment in not pressing her on the legal status of the flag and the anthem, what areas of our national life Brussels cannot negotiate on and—most importantly, and I hope a question that finds sympathy with other noble Lords—an index to the treaty of Lisbon.

Baroness Ludford: Perhaps I can help to answer one of the questions that has been asked about the powers of the European Court of Justice over common foreign and security policy. I draw noble Lords' attention to Article 275 of the Treaty on the Functioning of the European Union. It states:
	"The Court of Justice of the European Union shall not have jurisdiction with respect to the provisions relating to the common foreign and security policy nor with respect to Acts adopted on the basis of those provisions".
	I add for the sake of completeness:
	"However, the Court shall have jurisdiction to monitor compliance with Article 40 of the treaty on European Union"—
	I think that is the one that says that what is done under CFSP should not impinge on Community competence—
	"and to rule on proceedings ... reviewing the legality of decisions providing for restrictive measures".
	I think that that refers to the rules on the blacklisting of terrorist organisations, where the Court of Justice does have competence, which it is increasingly exercising. That very restricted competence in the second pillar of the CFSP for judicial review by the Court of Justice is spelt out in Article 275 and is very limited.

Lord Pearson of Rannoch: I am most grateful to the noble Baroness. We will come back to this on Amendment No. 14.

Lord Stoddart of Swindon: Like the noble Lords, Lord Blackwell and Lord Pearson, I am a bit concerned that the questions in this amendment are being asked after the horse has bolted, so to speak. Surely these are all questions that need answers before we agree to ratify the treaty. Once the treaty is ratified, they can do just as they damn well like. I say to the noble Lord, Lord Howell, that the questions are superb. They have been very well thought out. They need to be asked, and they need to be answered—but before the treaty passes from this House. I hope we can get some of the answers.
	I should like to put one or two other questions to the Leader of the House because many serious rumours are circulating and they worry people, not only Euro-sceptics but others as well. One of them is that there is a move for the amalgamation of the posts of President of the European Commission and president of the Council. The Leader of the House is shaking her head, but that is one of the rumours and it is a very strong rumour indeed. If such a post were to be created, it would be a very powerful post indeed. Therefore, if the noble Baroness can give us an assurance that there is no truth in the rumour and that the British Government would oppose and veto it if it were ever brought forward, it would be extremely helpful.

Lord Tomlinson: If the noble Lord looks at Article 1(18) of the treaty he will find it clear that the President of the European Council must not be President of the European Commission. That is explicit. It is clearly laid down and is there for anyone to read. There is total clarity.

Lord Stoddart of Swindon: We read all sorts of things and we know that sometimes they do not mean exactly what they say. If I can obtain an absolute assurance, not only for me but for many other people as well, that there is no truth in this rumour, it would be helpful for our further debates.
	Then we come to the question of the powers and trappings of the presidency. I mentioned to the Leader of the House—who was very kind to see some of us yesterday—that a lot of suggestions were going around that the post will be made very powerful and that the president will have a plane, a staff of 36, a fleet of limousines and a palace. That seems to me to going over the top. She said that that was rubbish, and I took her word that this was mere rumour mongering by people opposed to the whole concept. I can assure noble Lords that it was not me who sent the rumours around. But this morning, lo and behold, when I looked at the EUobserver, I found that the European Parliament itself is concerned about it. This is what was said:
	"'The treaty is very clear about the duties [of the president],' the head of the parliament's budget committee, Reimer Boege, told EUobserver, noting that it says the person can have an administrative role, 'but not take over an executive function.'".
	That is very good, and fortunately—as far that report is concerned—the European Parliament can control the purse strings. I should therefore like to know whether Her Majesty's Government agree with the European Parliament, or at least with the head of the budget committee, that the role is administrative and will not be executive, and whether Her Majesty's Government will see to it that that situation remains. If they do not, the post of president will grow and grow until it supersedes and overrides the Heads of State or Government in the nation states.
	I hope the noble Baroness will be able to give assurances on the matters I have raised. They are current; they are circulating; and they need to be put in proper and truthful context.

Lord Waddington: This amendment highlights a highly unsatisfactory situation. I could not possibly vote for it, for some of the reasons that have already been advanced, for instance by the noble Lord, Lord Tomlinson. All the amendment does is highlight some of the most unsatisfactory aspects of the agreement signed up to by our Prime Minister without giving any hint of a solution to the problem that has arisen as a result of his signature. The amendment does not for one moment, for instance, provide for Parliament's agreement to changes that may occur after the treaty has been ratified. It cannot and it does not.
	The real question, therefore, is why did the Prime Minister sign up to the deal without agreement being reached on all the matters listed in subsection (2) of the proposed new clause? Why on earth did he sign up to an agreement without,
	"the powers and duties of the"—
	new-style—
	"President of the European Council"
	being properly defined? Surely that is a matter of the most immense importance.
	If you are going to have a semi-permanent President of the European Council, it is inevitable that the balance of power between the President of the Commission and the President of the European Council will change from the situation as it is at present. I quite understand those who say that, as a result, certain changes in the powers of the president will have to come about. But for goodness' sake, we are supposed to be giving our approval to an agreement. If we are asked to sign up to an agreement that leaves all of these important matters undefined, it is a pretty ridiculous state of affairs.
	Why on earth should we be asked to ratify a treaty without being told what is,
	"the detailed role of the President of the European Council"?
	What is his,
	"relation to the Heads of Government of the nation holding the rotating presidency of the EU"?
	Goodness me, why on earth should we ratify this treaty without even being told what will be,
	"the powers and duties of the EU High Representative"?

Lord Lea of Crondall: Is the noble Lord not asking in fact for a constitution? Looking at the President of the United States, the President of France or the president of any of the countries where these various rumours or mirages may be built up, you see that they have a constitution. There is also the high representative, and therefore there will be an evolving role. However, is not what the noble Lord asks for the complete opposite of normal Conservative philosophy, as the noble Lord, Lord Wallace of Saltaire, said? It is moving us to demand something rather like a treaty signed in Philadelphia in 1787.

Lord Waddington: I do not want a constitution but even less do I want half a constitution. If we are to have thrust on us all these constitutional changes of great importance, we should obviously know what they really mean. That is the answer to the noble Lord's question, and we should certainly be told what the powers and duties of the EU high representative are to be. If we are not to be told that, I am blessed if I can see why we should be asked to ratify this treaty. It seems odd in the extreme that we should be asked to ratify a treaty which leaves all these very important matters entirely undecided.

Baroness Ashton of Upholland: Again, we have had a very interesting and important debate. I begin where the noble Lord, Lord Waddington, ended. I think that close study of the treaty will demonstrate that these questions are not left unanswered in the way that he implied. I know that, like me, the noble Lord had a late night last night but I hope that he will be able to go back through the proposals in the treaty and see that some of the detail is more coloured-in than he indicated.
	In our deliberations on this group of amendments, I think we all agree that it is very important to continue the current scrutiny and, as the noble Lord, Lord Grenfell, says in his report from the European Union Committee, to consider how best to take forward some of the proposals in the treaty—particularly, as I indicated earlier, in relation to the role of Parliament. As the noble Lord, Lord Owen, suggested, we have a system for reporting back to Parliament. It takes place after every European Council meeting, although I accept that doing so after the event is not necessarily what noble Lords are seeking. There is correspondence with the committees before every Council of Ministers meeting and there is a six-monthly White Paper, to which I think the noble Lord, Lord Owen, referred, on forthcoming developments in the European Union, normally looking ahead to the next presidency. Of course, all forward-looking work programmes—the five-year programme and annual work programme from the Commission and so on—are deposited so that they can be scrutinised. Speaking from experience, I can say that Ministers are regularly invited to appear before Select Committees and sub-committees in order to describe and discuss particular points of interest of aspects of negotiations that are under way. Those discussions—again, I speak from personal experience—do not last for minutes but for hours as we take great note of, and scrutinise, the issues that are currently before the individual councils. I pay tribute to the members of the committee whom I have appeared before.
	I take issue with a proposition underpinning the amendments which suggests that there are articles that require further negotiation. That is not the case. No articles in the treaty of Lisbon require further negotiation. I have already indicated that I spent three days in Brussels during the recess, when I discussed with the head of the Council's Legal Service, Jean-Claude Piris, the Secretary-General of the Commission, Catherine Day, and others their views on the treaty and on the future. What was striking about these discussions was that not only did these people think that the treaty addresses far better some of the questions that have reasonably been raised about how to ensure that the European Union delivers for its citizens but they also believed that it sets a proper and, they would argue, lasting institutional framework. There was no appetite at all for further treaty negotiations.
	I turn to the specific points that have been raised. I am grateful to the noble Baroness, Lady Ludford, who, as a Member of the European Parliament, has great experience of the European Court of Justice. I agree with the noble Lord, Lord Owen, that this is a very important issue, and later we will be able to have much chunkier discussions about the ECJ. I know that there will be a lot of interest in aspects of foreign policy, about which the noble Lord, Lord Owen, is particularly concerned, and justice and home affairs issues with the collapse of Pillar 3, and there will be an opportunity to discuss the opt-ins for the UK more fully. Perhaps I may write to the noble Lord, Lord Owen, between now and the next Committee sitting, with a copy placed in the Library for all noble Lords who have participated in the debate, setting out what I consider to be the role of the European Court of Justice. I do not suggest that in order to evade debate—far from it—but to provide a backdrop to the discussion which the noble Lord, Lord Owen, in particular, and others can use as a template in taking our discussions further. I should be very happy to do that if it would be helpful. I see several noble Lords nodding, so I shall ensure that it is done.
	I realise that I did not answer the point raised by the noble Lord, Lord Blackwell, about the two articles that are different. The evidence that I have is from Essex University, which talks about 35 differences between the two treaties. I do not have the documentation in front of me and so I propose to share it with the noble Lord and take it from there. I am conscious that he was very specific about articles and I have been very specific about differences.

Lord Blackwell: I am very grateful to the noble Baroness. That would be very helpful.

Baroness Ashton of Upholland: Again, I apologise for not dealing with the matter there and then.

Lord Pearson of Rannoch: It could be circulated.

Baroness Ashton of Upholland: That would be even better. The noble Lord, Lord Pearson, asked specifically about an index. I wonder whether he has seen the comparative table of the treaties. I know that it is not an index as such but I found it incredibly helpful, and I draw noble Lords' attention to the fact that it is in the Printed Paper Office. It goes through each of the articles and relates them to the previous treaties, although it does not do what I think the noble Lord was after. Article 26 refers to the ECJ and Article 27 refers to the Council, and so on. We do not have an index of that kind—at least, if we do, I have never seen one—but I hope that it will deal with some of the issues that noble Lords have.

Lord Pearson of Rannoch: I was aware of the document to which the noble Baroness refers but I was simply asking for an index such as that printed in the British Management Data Foundation's analysis of the treaty of Lisbon. That index runs to several pages. Under A one can look up, for example, administrative co-operation, advisory bodies, agricultural and animal welfare. Everything covered by the treaties is in this index and that is what we need, with a page number and an article number relating to the new treaty of Lisbon. I am sure that in the noble Baroness's department there are many people who could run that up overnight. It would be enormously helpful to your Lordships.

Baroness Ashton of Upholland: In those famous words, "I shall see what I can do", but I am not sure about running it up overnight. That sounds like an interesting proposition, but the noble Lord makes a point of sorts. I shall come on to that document in a moment because it relates to something else that I want to mention. The flying of flags is covered by regulation in this country under the Town and Country Planning (Control of Advertisements) (England) Regulations 2007. In response to a specific question asked by the noble Lord, for the avoidance of doubt, neither the European Union flag nor the anthem have any legal status in the UK or in the rest of the European Union.

Lord Pearson of Rannoch: They do not lack status in the United Kingdom. I am aware of the legislation that the United Kingdom passed to allow the flag to be flown here in parity with national flags and so on. I also asked where that legislation is rooted in European legislation. Is this just one of those areas that are part of the doctrine of the occupied field that the European Union went into, inventing a flag and flying it? It has been withdrawn from the constitutional treaty of Lisbon. As I understand it, 16 countries have signed a document saying that they want it to be their official flag. What is its legal position? Does it have a legal basis? The same questions apply to Beethoven's "Ode to Joy".

Baroness Ashton of Upholland: It does not have a legal status. That's it—it does not have a legal status, full stop.
	The noble Lord, Lord Stoddart, asked me a question. I was waiting for someone to ask me about the private jet, lots of staff and so on. When I was in Brussels this was running as a news story, that there had been a discussion on a Tuesday evening, I think, where a jet and lots of other wonderful things had theoretically been discussed. Our permanent representative there—our ambassador, if I may call him that—was at the dinner and there was no discussion of that kind. There has been no suggestion of a private jet, no proposals or discussions about the residence and the salary and no formal discussions about the precision of that job, though obviously there have been informal discussions on the respective responsibilities of the different people defined within the treaty—for example, the President of the Commission, the high representative, the rotating presidency and the President of the European Council, which are exactly the issues raised by Members of the Committee here. As I indicated, the briefing about the 10,000 troops is not true. As we go through the line-by-line scrutiny, issues such as defence and other matters will be raised, and I have no doubt that the noble Lord will have an opportunity to have any myths exploded or, who knows, any clarification or confirmation that may be appropriate.
	There has also been confusion about whether the president of the Council and the high representative could be a merged job. I hope that the noble Lord, Lord Stoddart, is reassured about that—that that is not allowed under the treaty. A specific reference says that if you hold office for the Commission you cannot hold any other office. I think the problem goes back to the glorious blue book. I must again thank the noble Lords, Lord Pearson, Lord Willoughby de Broke and Lord Stoddart, for presenting me with a copy of the book. On page 36 of the opening section, under "President of the European Council", it states:
	"A clause in the earlier drafts of the Treaty specifically excluded the President of the Commission from becoming the President of the European Council. However, this clause has been removed ... and there is nothing in the text of the Treaty",
	of Lisbon,
	"to prevent the President of the Commission also becoming the President to the European Council".
	That is not true; they have it wrong in the book. I hope that the person who wrote it, whom I have met, will get in touch and have it corrected. It is absolutely clear in the treaty—with luck I shall find the right bit—that if you hold a Commission role you cannot hold another role. So the vice-president of the Commission, who is also the high representative, cannot become president of the Council; the president of the Commission cannot become president of the Council; and the president of the Commission cannot become the vice-president of the Commission, because you cannot hold two roles.

Lord Willoughby de Broke: This is a self-amending treaty under the passerelle arrangements, which we will discuss later. Is it not conceivable that the Council could vote by unanimity to make this a matter for qualified majority voting? Therefore, there could be a double-hatter.

Baroness Ashton of Upholland: The UK Government do not agree with double-hatting or allowing two of those three positions to be put together. A change would therefore require the UK to do something that it does not want to do. In theory one could make a decision to go from unanimity to QMV and therefore arrive at another conclusion. I lose the plot here a little. I have worried about why noble Lords think that the two jobs could be together, but I think it is just the way that the provision reads. I make no slur on it, but it is the way that it reads.

Lord Owen: One of the reasons why this has caused concern is that the Dutch Government—on exactly the same wording as is currently in the treaty, it has not changed—have told their parliament that they believe it would be possible to double-hat the president of the Council and the president of the Commission. I will be very happy to give the noble Baroness the reference to that. The Dutch are international lawyers of some distinction. I welcome the British Government's position and I think that their judgment is correct. I am worried about the reference to the ECJ and a creative interpretation of the power.

Baroness Ashton of Upholland: I have the consolidated text before me. If I look at the Treaty on the European Union and go to Article 17(5)—this is for the connoisseurs—and then go to Article 244 in the Treaty on the Functioning of the European Union, I see that Article 245 says:
	"The members of the Commission may not, during their term of office, engage in any other occupation, whether gainful or not".
	It is pretty clear to me.

Lord Anderson of Swansea: It continues:
	"Members of the Commission shall neither seek nor take instructions from any government or from any other body".
	That is Article 118, which seems to add substance to the initial article mentioned, Article 219(8).

Baroness Ashton of Upholland: I am very grateful to my noble friend. As far as we and our lawyers are concerned, it is very clear. I cannot speak for the Dutch Government and their interpretation.

Lord Waddington: I do not have the page before me, but in the EU Committee report which we debated at the same time as Second Reading there was a reference to a Commission official saying that double-hatting was not an issue at present, but that it might well become a live issue in the near future. I seem to remember that that was said in the report.

Baroness Ashton of Upholland: I will have to check whether an official said that. I am going, first, on the conclusions of the committee, regardless of what evidence was put before it—and there was much and varied evidence; secondly, on what is in the treaty and the consolidated text which tells me what it would look like if this is ratified; and, thirdly, on how the legal interpretation will be taken forward. I am keen to make progress, if I may.

Lord Hannay of Chiswick: I say on the basis of a lot of experience that you do not have to believe every word that a Commission official says.

Baroness Ashton of Upholland: I could not possibly comment.

Lord Blackwell: According to the passage that the Minister read out, the high commissioner for foreign affairs is, as I understand it, a member of the Commission, but is also double-hatting as the high representative. How is that different from the president of the Commission also being the president of the Council? Why does it work for one but not for the other?

Baroness Ashton of Upholland: It does not really work for one. The proposal is that we have a high representative who becomes the vice-president of the Commission with very specific functions. That is a defined role within the treaty which is vested in one person. I was being asked whether one could then take the other roles and combine them into one person and one role. The answer which is given in the treaty is that—for good reasons, with which I am sure the Committee would agree—a member of the Commission cannot take on both roles. It is not possible. Noble Lords were specifically concerned that we would end up with an amalgam of these positions. Noble Lords quite reasonably fear that it would be a very powerful figure who would do a huge variety of things. I argue that it would probably be an impossible job in any event. But it is not possible under the treaty.

Lord Anderson of Swansea: Any future double-hatting would require a specific amendment to the treaty that is agreed by all national Governments.

Baroness Ashton of Upholland: Precisely.

Baroness Ludford: As I am, as the Minister pointed out, an MEP, I should have declared an interest. One safeguard against double-hatting is the right of the European Parliament to elect the president of the Commission. I can never see the European Parliament agreeing to double-hatting.

Lord Lea of Crondall: Perhaps I may make a suggestion. It seems to me that there are so many different types of double-hatting. It has been obvious on the Foreign Affairs, Defence and Development Policy Sub-Committee that many jobs around the world require some double-hatting. As there are special cases such as Kosovo, Macedonia and so on, we need double-hatting. The president of the Commission and the President of the Council of Ministers could be described as double-hatting in the same sense as other kinds of double-hatting. Perhaps we need a note about the different types of double-hatting, because we are talking about all sorts of things at once and it is not helpful.

Baroness Ashton of Upholland: I think I am grateful to my noble friend. The issue he raises is absolutely right. In a sense, we are discussing a concept which means different things to different people. The principle behind the concerns on this issue is the amalgamation in one person of all of these different responsibilities. I hope that I have at least in part laid this to rest, by reference back to the treaty. I hope noble Lords will take the chance to look at that.

Lord Owen: On page 58 of its third report of Session 2007-08, on foreign policy aspects of the Lisbon treaty, the House of Commons Foreign Affairs Committee states that,
	"it is regrettable that the Lisbon Treaty does not state explicitly that the new European Council President may not simultaneously hold any other office".

Baroness Ashton of Upholland: Indeed, and that rather goes back to what is in this as well, which is why I went back to the treaty and the consolidated text. The wording in the treaty on the functioning of the European Union is what I read out, and which was supplemented by my noble friend Lord Anderson. The wording of the treaty is in fact what we can go back to. I fear that there has been a lot of discussion about something that can be proven by simply going back to the treaty, which is explicit. Nothing I have read has moved me from that opinion, but if noble Lords can prove differently, that could change.
	I shall move to the issues that have been raised in the amendment and perhaps put a little flesh on the bones or, in my new description, colour-in a bit some of the questions raised about the responsibilities of the roles. Amendment No. 4 focuses on the powers and duties of the President of the European Council and the post of the high representative, which are clearly set out in the Lisbon treaty. I shall go through quickly what it says about the role of the full-time president of the European Council, as the noble Lord, Lord Waddington, reasonably wants to know what the job is. The treaty states:
	"The President ... shall chair and drive forward its work ... ensure preparation and continuity of the work of the European Council working in cooperation with the President of the Commission, and on the basis of the work of the General Affairs Council ... shall endeavour to facilitate cohesion and consensus ... and present a report to the European Parliament after each of the meetings of the European Council".
	At that level and capacity the president shall,
	"ensure the external representation of the Union on issues concerning its common foreign and security policy, without prejudice to the powers of the High Representative",
	and,
	"shall not hold a national office".
	That is the job description.
	I accept that the detail on what the person will do on a daily basis is not in the treaty, nor would we expect it to be, but it gives us part of the colouring-in on what the role is meant to be. Noble Lords may not agree with the role but as my noble friend said, while the rotating presidency might be beneficial in many ways, it creates issues of continuity in some of the extremely high level negotiations that take place. We shall talk in more detail later about the role of the president. In discussions with the European Union, President Putin of Russia has met 16 different presidents of the Council because of the changeover, many of whom will have had different priorities because of their status. They are running their own countries as well, so when President Sarkozy becomes president of the Council he will also be running France. That is an arduous additional responsibility for many, and I am delighted that the European Union has decided to move to a much more sensible way of taking the matter forward while ensuring that it is done properly, the person is appointed correctly and that it is for two and a half years, plus two and a half, making a maximum of five years.
	Within the text we also have the high representative's role concerning the EU's common foreign and security policy, contributed to by proposals to that policy, but he will carry it out as mandated by the Council. The same applies to common security and defence, and he will preside over the foreign affairs council. Article 94E of the treaty sets out the high representative's role as one of the Commission's vice-presidents and his responsibility for aspects of external relations and for co-ordinating some of the external action. This is meant to be a consolidation and a bringing together of the different aspects of how the European Union operates externally. I am sure that noble Lords will see that that is of huge potential benefit.
	Amendment No. 164 specifically looks for clarification on a number of questions around the full-time president's role. Methods of election and terms of office are clear from the Lisbon treaty, which states:
	"The European Council shall elect its president by a qualified majority for a term of two and a half years, renewable once".
	It is explicit that the president of the European Council,
	"shall not hold a national office".
	There is no provision regulating previous occupations of candidates but they certainly could not take up that role and currently hold a national office. It is equally clear that the roles of the president of the European Council and high representative cannot be duplicated. It is clear in the text that the president of the European Council should,
	"ensure the external representation without prejudice to the powers of the high representative".
	Noble Lords have rightly indicated that the high representative brings together the current high representative introduced in Amsterdam and the Commission For External Relations. As I said, it is an important move. The Foreign Affairs Committee in another place concluded that,
	"the new post of High Representative of the Union for Foreign Affairs and Security Policy has the potential to give the EU a more streamlined international presence and to contribute to the more coherent development and implementation of external policy. We further conclude that it is clear that the High Representative is there to enact agreed foreign policy".
	Those words "enact agreed foreign policy" are very important in the context of the position—executive or administrative. The high representative is not in that context a policy-maker appearing on the stage as it were to represent the 27 nations. It would be an agreed mandate.
	The Select Committee on the European Union report on the impact of the treaty similarly concluded that the creation of a high representative foreign affairs and security policy by the president of the Commission represents an important institutional innovation of the Lisbon treaty, which could have significant impacts on the way in which the EU formulates and implements external policy. In the light of evidence the post could bring additional coherence and effectiveness to the EU's external action. The questions relating to the powers and duties of the president and high representative are clearly answered in the treaty and I do not accept the argument that the amendment seeks to put forward.
	Amendment No. 155 requests that we lay a report on how the provisions on the high representative and external action service differ from those in the treaty establishing a constitution for Europe. It is not necessary. The Lisbon treaty does not change the mandate for the high representative, including the provision that he be supported by the European external action service drawn from existing foreign policy services of the Council secretariat, the Commission and member state secondees.
	The Government supported these reforms as sensible improvements to the structures for implementation and we continue to support them in the Lisbon treaty. We secured the deletion of what we regarded as a misleading title: Union Minister for Foreign Affairs. The new title makes it absolutely clear that the high representative will represent the agreed views of member states. He will not in any sense be a Foreign Minister.

Lord Stoddart of Swindon: Will the Minster clarify the position of the high representative in relation to agreed foreign policy matters that may involve the United Nations? Would the high representatives be able to speak at the UN or would that policy be put by one of the permanent representatives to the UN Security Council?

Baroness Ashton of Upholland: It will not affect the relationship with the Security Council. As happens now with Mr Solana there are occasions when the EU speaks at the UN. In so doing the high representative could speak only on agreed European Union policy. He could not speak in any other context. He cannot make policy or determine changes in policy. He can speak only when there is an agreed policy. If there is not an agreed policy in which all member states, including the UK are agreed, the high representative could not speak on that policy. It would be for the UN to determine if it wished him to do so. I hope that that is clear.
	Obviously the posts have yet to be filled. We have yet to ratify the treaty so there are issues about its implementation. Some preparatory technical discussions have taken place under the Slovenian presidency, which is normal practice in any legislation that I have been involved in. You make the preparations but that should be done only on the basis of not pre-empting decisions that would be reached. When there have been technical issues or developments, details that we have had available have been given to the Select Committees, as we would be expected to do.
	I think the real issue behind all this is how we make sure we are kept in touch with what happens next, not in terms of negotiations on a treaty but on implementation, particularly around these rules. My honourable friend Jim Murphy, the Minister for Europe, has today written to the noble Lord, Lord Grenfell. I shall not read out the whole letter—it is hot off the press, and I hope the noble Lord has actually got it—but I will quote from it and will make sure that noble Lords get a copy of it and that a copy is put in Library.
	"There are a number of implementation issues to be decided before the Treaty enters into force. Preparatory technical discussions in some areas have already begun under the Slovene Presidency. Whilst it is only sensible to ensure the EU is ready to implement the Treaty - if all countries have ratified - we have made it clear to and agreed with our EU partners that no final decisions can be taken until ratification is confirmed ... I wish to re-affirm to you that the Government will do its utmost to keep both Houses informed, across the full range of Treaty Implementation issues through Ministerial contact before any discussions of implementation issues at European Council and sectoral EU Ministerial meetings".
	I shall pass on the full text, which goes into some detail about the kinds of things that are being discussed, and I hope noble Lords will find it of benefit.
	As I have indicated, some preparatory work has been carried out by the Council legal service. When I met Jean-Claude Piris, the head of the legal service of the Council, in Brussels, he was clear that it was simply to allow the Lisbon treaty changes to be given effect smoothly and that nothing would be done that would pre-empt ratification.
	We will have a chance to debate the issues concerned with the role and function of the external action service later because there are amendments that will enable us to do that.

Lord Dykes: As the noble Baroness the Leader of the House was enunciating those propositions about the terms and conditions of employment, in a way, of the high representative and the Commission president, I was reflecting on them in the overall context of all the member states and the process of ratification. I believe that eight countries have now ratified the treaty and a bunch of nine countries is to come soon. Then there is, presumably, the Irish referendum and the referendums in the summer and the autumn, finishing with Sweden in November. It is a long process, and it would be quite improper for any specific terms or conditions to be laid down by anybody, whoever it might be, even the Commission or the Council Ministers, in terms of draft conditions on any of those matters until full ratification has occurred.

Baroness Ashton of Upholland: The noble Lord is absolutely correct; it would indeed be improper, and we have made that clear. From discussing the issues with some Council officials working on this and with the Commission in Brussels, I can say that there was no suggestion of doing anything like that. On the other hand, as the noble Lord would accept, with a possibility of ratification towards the end of the year and the treaty potentially coming into force at the beginning of next year, there is lots more to do. We will not bring it all in at once, but none the less it is important to work out how the process would take place. We have endeavoured to keep in touch with the Select Committees here on the technical issues, and we will make sure that we continue to do that. As the letter of my honourable friend Jim Murphy indicated, we will make sure that we keep people in touch with that. It does not preclude debates in your Lordships' House or another place on specific issues concerned with it.

Lord Roper: It might help the Committee to know that Sub-Committee C of the European Union Committee is going to be holding a short inquiry on the implementation of the sections of treaty dealing with external action and hopes to be able to bring a report to the House if not before the summer then in time for us to debate it when we come back in the autumn, which is probably when the decisions will be becoming ripe in Brussels.

Baroness Ashton of Upholland: I am grateful to the noble Lord. I am sure that that will be replicated in other sub-committees of the Select Committee and in another place.
	I shall finish by going a bit further on some of the issues relating to the external action service. The technical discussions relate to the implementation of the provisions in the Lisbon treaty. Article 13a states:
	"In fulfilling his mandate, the High Representative shall be assisted by a European External Action Service. This service shall work in cooperation with the diplomatic services of the Member States and shall comprise officials from relevant departments of the General Secretariat of the Council and of the Commission as well as staff seconded from national diplomatic services of the Member States. The organisation and functioning of the European External Action Service shall be established by a decision of the Council".
	The detailed composition of that service will be agreed by the member states by unanimity following the entry into force of the treaty. At Lisbon, member states agreed a declaration that preparatory work should begin as soon as the treaty is signed for the reasons that I have given, but I have already indicated that no big decisions are to be taken.
	It is not a new bureaucracy. It will be drawn together from the Council secretariat, Commission services and member states' representatives structured through secondments. As the Select Committee noted, the creation of an external action service is an important institutional innovation of the Lisbon treaty. The service is intended to provide the high representative and the EU with analysis and support as well as to improve the consistency of the EU's representation in third countries and at international organisations. There will be no detailed discussion on the composition and function and no decision to launch until the treaty is in force and the decision is taken by unanimity. There will be discussions over the next two months. The presidency envisages further discussions, including about the scope of the general affairs council and the foreign affairs council, the list of council configurations and the role of the internal security committee. As I have indicated, we intend to keep Parliament updated on those issues.
	I hope that that was a colouring-in exercise about what the functions and roles will be. I found it extremely useful to understand noble Lords' concerns. I do not see the need for the amendments that have been tabled. I hope that noble Lords will accept that the Government's clear intention is to keep the House, and particularly the Select Committees, up to speed with what is happening. I hope that on that basis the noble Lord will feel able to withdraw his amendment.

Lord Pearson of Rannoch: I hope I have not missed the noble Baroness's reply in her answer, but I think she dismissed the idea of United Kingdom troops being committed to the EU army and for that we are, of course, grateful. I think she said that there is no basis in European law for the European flag or anthem. I am not sure that I heard her this time dismiss the rumour that borderless healthcare is on the way.

Baroness Ashton of Upholland: There is a proposal for a directive on healthcare, but it is nothing to do with the Lisbon treaty. If the noble Lord will forgive me, I shall write to him in more detail about it, but it is nothing to do with the treaty. It is a separate proposal that is running its way through Brussels in the usual way.

Lord Pearson of Rannoch: There is also the question of whether the treaty could lead to the harmonisation of direct taxes. Finally, I think the noble Baroness said she would write to me about those areas of our national law upon which Brussels—the European Union—cannot act.

Baroness Ashton of Upholland: That is an almost philosophical debate, which is why I was going to save it for the next big debate we have, in which the noble Lord will play a leading light. I am sure he will because he has played a leading light in every debate we have had so far. There is an interesting discussion to be had about when the European Union, member states, the Commission and so on put forward proposals for areas to be discussed and deliberated. We have just had a brief discussion about healthcare, and noble Lords will know that there were proposals at the European Council that my right honourable friend the Prime Minister went to last time that we feel particularly concerned about; for example, proposals to do with climate change and international issues. Ten years ago, those issues might well not have been on the agenda at a European Council, but I would argue—and I suspect the noble Lord might agree with me—that they are issues that need to be tackled internationally, not by an individual state. They demonstrate that agendas in Europe change depending upon the issues coming forward, many of which increasingly require international, certainly Europe-wide, responses. It is therefore not a simple question of saying that these are the areas that would never be discussed. Another example is that issues to do with banks and financial institutions have become more prominent of late, but would not necessarily have been on the agenda some years ago.

Lord Pearson of Rannoch: The noble Baroness would not put direct tax into that category, would she? Can she assure us that there is nothing in the intention of the European project to extend its influence over direct tax and tax harmonisation?

Baroness Ashton of Upholland: I am always hesitant to say anything to the noble Lord when I do not quite know his source. Often in these discussions, a particular issue is bubbling away. Healthcare was a good example. If I had simply stood up and said, "No, we are not doing anything on healthcare", that would have been factually incorrect. It is nothing to do with the treaty, but there is a proposal on healthcare. I know of nothing to do with taxation, but I want to check—which I will in the break—before I say categorically, "Never, no, never", on anything to do with tax; not direct tax, of course, although the noble Lord may be quoting from a source that I have not yet seen.

Lord Howell of Guildford: I think that it is high time that we gave the noble Baroness a break. The sheer length of her exposition is demonstration of the enormous complexities of what we are dealing with and the vast range of unfinished business that is implied—which, contrary to the assertions of the Prime Minister, will lead to more institutional change, more constitutional change and more treaties, probably in the next few years, certainly within the next five-year period.
	I admit that the amendment is extremely limited in scope; and intentionally so. It was simply aimed at opening the door to a variety of issues, which has been opened wider, quite rightly, by some of your Lordships in very interesting comments. I hope that it is not facetious to say that it is possibly better to open doors before you try to go through them. That is what I was seeking to do by moving my amendment. When we open the door, we immediately find a sort of goulash or pot pourri of issues, difficulties and matters to be negotiated here, there and everywhere about where power is going, who is going to hold it over us and how it is to be administered and called to account. All those things are left rather in the air.
	Two aspects came out in our debate. One was, frankly, not dealt with in the amendment. As I said, that is the wider question, which will come up again and again. We are moving to a scene in which, with the collapse of the third pillar, a vastly wider range of issues come within the purview of the rulings—apparently, I am not allowed to call them judgments—of the European Court of Justice. We will want to think about the mechanisms by which Ministers can interpret to Parliament the effect that those rulings—which may lie well outside what appears to be delineated in the treaty—will have on our laws, our behaviour, our lifestyle pattern, budget and all the rest. We will need to think very hard about that. That is coming up in later amendments and we must all think about that very carefully.
	The point is that the ECJ has become what the noble Lord, Lord Wedderburn, who is not in his seat, has called a creative court. It is a court that does not merely administer or seek to make judgments on existing laws, but seeks to make new laws and to interpret existing laws in wider ways. That is now being spread right across areas of home affairs and justice and may even intrude, despite what the treaty says, into areas of common foreign and security policy. We will have to see, but it is highly likely that it will. Some of our debates will be able to demonstrate that that is a possibility—even by interpreting, or trying to interpret, what we all recognise to be the inaccessible language of the treaty.
	That is the broader question that lies ahead. The narrower question, which the amendment directly addresses, is that of the role of the president. That is crucial, because here again there is the matter of where power lies, how it will be administered and with what powers the president will be endowed, as opposed to the head of state rotating president, as opposed to the President of the Commission and as opposed to the High Representative, which is the Foreign Minister with a new name, but with the same powers. All those things need to be sorted out because they affect us very directly. They are not remote issues that are considered boring and can be pushed aside, they directly affect how we live in this country and how we can decide who we hold accountable when things go wrong, or even give credit to when things go right.
	The Economist article that I cited earlier states that in the treaty, all the compromises have reduced the definition of the role of the president—the full-time president—to gibberish. That is probably right. Several other commentators, including the eminent and very effective Quentin Peel, in the Financial Times, talks about "another messy compromise" in trying to decide this turf war of who does what between the President of the Commission, the rotating head of state president, and all the rest. There is a lot to be sorted out there and it cannot be just pushed aside by saying, "It is all right; we will sorted out by discussion in the next few months".
	I am sure that your Lordships will feel that the time is getting near when we could take a break and have some dinner, but in all this discussion, it seems to be constantly forgotten by Ministers that this is an evolving process and a self-evolving—if that is not too odd a word—Bill and treaty. It contains within itself the power to move on, to carry whole areas out of the national veto field into the qualified majority voting field—sometimes to our benefit, I must concede that; sometimes not at all. But we cannot tell. We do not know how that is going to work. We are taking a step into the dark in the way that we would have done with the previous constitutional treaty, but perhaps not so much as we would have with the Maastricht treaty and previous treaties, although obviously they were highly significant steps forward as well.
	One is left feeling that there is a real danger that if we rely on the scrutiny and calling to account that we have had in the past, it will not be enough. We have set in motion a new vehicle that will move faster and will require much more agile supervision if we are to know what is to happen before it hits us and takes us by surprise. There is something deeply unsatisfactory about how our Parliament has, even in the recent past, been able to keep up with European legislative procedures, with the rulings of the court, with the decisions of Ministers in the European Council and with the instruments and regulations of the Commission. Everyone feels that we should do better in this Parliament. Just receiving information, being kept up-to-date and being told to tick the Brussels boxes is not enough. We want a European system that is more flexible, which gives a greater and more progressive role for the nation states—as I said the other day, probably the most progressive idea in the entire concept of European development.
	We want to move on from the current position and not see ourselves taken down the road to more centralisation and a reinforcement of the outdated European concepts to which Ministers and the Liberal Democrats seem to cling, under which they cannot see that we are living in entirely new conditions of a networked world in which the old idea of blocs and centralisation are completely out of date. Having said that, of course we will return to these matters.

Lord Wallace of Saltaire: I apologise for intervening, but we have a couple of minutes before we break. We on these Benches entirely understand that we are living in a fast-evolving world. That is precisely why we think that things cannot be put down in black and white. What is the noble Lord's conception of politics, both at the national and European level? I think that I heard him say that he wants to see the distant shore and that, unless he does, one step is too much for him—to misquote the hymn that we both used to sing as boys.
	The Conservative idea of politics is that it is a messy compromise. I assume that Edmund Burke would have said that international politics is a messier compromise than domestic politics. If that is not the case—if everything has to be sewn up and clarified in black and white—I do not see how we can have a Conservative foreign policy.

Lord Howell of Guildford: It is a little late in the timing, and certainly in my speech, to branch off into political philosophy. It is also possibly too late to sing the words of "Abide with me", which I think is Hymn No. 354, but not, "one step enough for me". I ask noble Lords to leave all that aside and merely allow me to say that the answers to our concerns, and the understanding about where Europe should be going, are shallow and unsatisfactory in the minds of ministerial and Liberal Democrat spokesmen. A new and much better Europe can be constructed, and we are quite ready to bring forward our ideas about how that should be done. We have the very large support of many wise people throughout modern Europe, which is a quite different place to the one it was 10 years ago with the return of the ex-communist countries, which I visited last week and which have a new liveliness and realism about how much centralisation they want and how much they do not want. I move, I am afraid, beyond the amendment in saying these things, and merely note that we will return to these issues and much greater ones behind them later on in our debates. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bach: I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee does not begin again before 8.30 pm.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

Taxation: Inheritance Tax and Capital Gains Tax

Lord Burnett: asked Her Majesty's Government what plans they have for the future of inheritance tax and capital gains tax.
	My Lords, I am grateful to have been given this opportunity to debate these tax matters. I draw the House's attention to my interests, which are contained in the Register of Members' Interests. I was given a similar opportunity in February last year to discuss inheritance tax, and I spent a considerable part of my speech discussing and recommending to the Government that the nil-rate tax band between spouses and civil partners should be transferable. I gave a series of what I thought were compelling reasons why this should be done. I am delighted that, six months later, the Government decided to adopt these suggestions.
	I hope that the House will forgive me if I make a few general observations on international tax avoidance and evasion, and if some of what I have to say gives rise to a measure of optimism. I have given Front-Benchers notice of this. When a new President, whether Republican or Democrat, is elected in America, there will be considerable international impetus to bear down ever more strongly on international avoidance and evasion. I shall advert to that later.
	It is one of the key principles, if not the key principle, of taxation that it should be fair. It is imperative to have a fair tax system, but one that recognises that we live in a worldwide or global economy. Individuals and businesses have opportunities, especially given the internet and other electronic means of communication, to set up and carry on their trade or profession wherever they choose. The level of taxation is an important consideration in their deciding where to carry on their businesses.
	It is interesting to note that from 1979 to 1997, mainstream corporation tax was reduced from 52 per cent to 33 per cent—a massive 19 per cent reduction. The tax take in real terms rose enormously. More businesses were created, with opportunity for everyone, and far more jobs were created. There was more money with that measure and other tax measures in those years. There was more money for hospitals, schools and pensioners, and these are lessons that we should never forget.
	In the last year or so, the Government have had one or two tax problems with their proposals. I gather than the planning gain supplement is unlikely to happen and that the Government are rethinking their announced measures to tax spouses, especially those who own and control businesses and make transfers between themselves. However, the most staggering tax blunder is the Government's decision to abandon the 10 per cent rate of tax without any compensatory measures for the 5 million of the poorest of the working population who are adversely affected. I believe that the Government will be forced to make changes to these measures.
	There was an outcry about the capital gains tax changes that were announced last year and which abolished taper relief. I shall refer to those later. Changes were made to soften the blow, but in addition there was considerable unease about the announcement of the taxation changes for non-domiciles. The Government had to make changes fast both to the capital gains tax and to the non-domicile proposals. It was interesting to hear a BBC programme on the non-domiciles by Rosie Millard last Saturday morning. It finished on the note that home is where the heart is, and certainly some of our non-domicile residents in this country seemed to have no great allegiance to the country other than it being a convenient and tax-efficient place to do business. There should have been a thorough and rigorous review of the tax status of non-domiciles that compared cost with benefit.
	There is reason to be reasonably confident that major economies in the world are becoming more enthusiastic about dealing with international, corporate and individual tax avoidance, some of which is evasion or at least on the cusp of it. I believe in international tax competition as long as international conglomerates and individuals pay their fair proportion of tax in the countries in which they operate. In Britain, we have sensible attempts to tackle these problems. The genesis of these attempts was made decades ago. I remember the controlled foreign companies anti-avoidance legislation in the 1980s. However, the only way in which to tackle these matters is for the advanced economies of the world to work together, and there are encouraging signs that they are beginning to do so.
	There are growing deficits in the major economies of the world, which makes it an auspicious time for us to face down and deal with international, individual and corporate tax abuse. Last year in the United States, three senators introduced the Stop Tax Haven Abuse Bill. The Bill will probably not become law. Nevertheless, one of the senators was a Republican and two were Democrats, one of whom was called Mr Barack Obama. One of the main thrusts of the Bill was to impose restrictions on foreign jurisdictions, financial institutions or international transactions that are either of primary money-laundering concern or, interestingly enough, impede US tax enforcement. There will be pressure to tighten up tax avoidance provisions in our series of double-tax treaties and, no doubt, in the OECD model.
	In the Financial Times on 28 February this year, it was reported that the Indian Government were going to take steps to clamp down on international tax avoidance and evasion. Again, earlier this year, the German Chancellor, Angela Merkel, visited both Monaco and Liechtenstein and made it abundantly clear that Germany would take steps to deal with international tax evasion. The French Government have announced similar aims. There is a growing international will for co-operation in this endeavour, and a desire to crack down on international tax evasion, whether by individuals or companies. I applaud these endeavours.
	In early 2005, I was a member of a committee in the other place when we debated what I believe was the first information-sharing protocol with a tax haven country. There will be, and no doubt have been, further such measures. I also remind the House of last year's amnesty, which was not quite an amnesty, for overseas deposits and holdings. Many hundreds of millions of pounds have been collected by this move. Tax fraudsters should beware, because I believe and hope that the net is closing in on them. Those who do not pay their rightful contributions are breaking the criminal law and ensuring that the rest of us pay more.
	I understand that Ministers and Members of Parliament were surprised at the outcry that greeted the announcement of the recent capital gains tax changes and the abolition of taper relief. Some changes have been made in respect of what I call business assets, including the new £1 million relief. Since its inception in 1965, capital gains tax has contained special relieving measures for bona fide businesses which have been owned for a period of years. I cite, for example, retirement relief, which was phased out by the Finance Act 1998, which introduced the new generous taper relief.
	The effect of the business taper was to encourage businesses to locate in this country and to encourage indigenous businesses to grow and to prosper here. On 16 June 1998, when we debated the introduction of taper relief in the other place, the Minister said that these changes are intended,
	"to encourage all businesses to grow and to encourage entrepreneurial activity ... We want to ensure that entrepreneurs themselves are in control of their companies and that they benefit from the wealth that is created in their companies".
	Finally, she said:
	"Fairness is another important aspect of the reform. Abolition of retirement relief, together with the ... changes we are making, will make capital gains tax a fairer tax".—[Official Report, Commons Standing Committee E, 16/6/98.]
	That was not said by someone from the right wing of the governing party—it was Red Dawn herself. No wonder the business community was up in arms about the changes by the Government, because the Government had broken a contract they had made with it 10 years previously. I look forward to hearing from the Government exactly how they envisage capital gains tax evolving in the next few years and their philosophy on that tax.
	As I said earlier, I was grateful that the Government adopted a system of transferability of nil-rate bands between spouses. There are a number of changes that could be made to inheritance tax. I outlined some of those last year when I stressed that the main complaint about inheritance tax was its unfairness in so far as the very rich can afford to avoid it by making potentially exempt transfers, whereas millions of people—so-called middle Britain—are liable to pay the tax. I made the suggestion last year that the system of potentially exempt transfers should be reconsidered with a quid pro quo of a higher nil rate and far lower rates.
	There are, however, some specific measures I would urge the Government to make—

Lord Bassam of Brighton: My Lords, the noble Lord has 10 minutes.

Lord Burnett: My Lords, the 2006 trust tax changes were ill considered and unfair. I am not referring to the discretionary trust regime, but to the interest in possession trusts, and accumulation and maintenance trusts, created during a settlor's life time. I quite understand that the Government were concerned that life tenants, often surviving widows, could have their income depleted by trustees appointing the income or even capital to others. This could easily have been dealt with by giving life tenants an absolute veto on such appointments. These interests in possession trusts are not set up for tax avoidance. They are set up in recognition of the fragility of marriage or to cope with vulnerable individuals and the young. The Inland Revenue's market research into the use of trusts conducted in January 2007 made it abundantly clear that these trusts were set up for reasons other than tax avoidance. I would hope that the Government would consider reverting to the pre-2006 regime where a trust was taxed on death, transfer or surrender by the life tenant.
	Another unfairness is the taxation of siblings who live together. They cannot marry and there are quite a few sisters and brothers living together who in appropriate circumstances should be allowed to transfer their estates, exempt on the death of the first, provided that the transfer is to the surviving sibling. This mirrors the relief available to the surviving spouse of marriage couples and civil partners.
	Finally, many hundreds of carers in this country have similarly forsaken the opportunity of getting on to the housing ladder to look after their parents, their relations or even their friends. Their selfless, conscientious dedication and effort should be recognised in so far as a modest house in which an individual lives with his own carer should, if it is transferred to the carer, be free of inheritance tax. I look forward to hearing from the Minister the Government's proposals on these and the matter of inheritance tax generally.

Lord Bassam of Brighton: My Lords, I remind speakers please to keep to the agreed time, otherwise the Minister will not be able to respond to all the points raised in the debate.

Lord Forsyth of Drumlean: My Lords, I am very grateful to the noble Lord, Lord Burnett, for raising this subject. I did not mind him running over time because he said a lot of things that I would say in agreement. He should be on these Benches, not his Benches, with the views that he has expressed on capital taxation. It seems to me that we need to have a lower, fairer, flatter, simpler tax system. Perhaps I may do something very unfashionable; that is, to praise the Prime Minister as Chancellor for some of the measures he implemented which were about producing a simpler and a more competitive tax system. Unfortunately, in respect of capital taxes and income taxes, he did only half what he needed to do, which is one reason why the Government are in such deep trouble in respect of tax. For example, it was a good idea to remove the 10 per cent band, which the then Chancellor introduced in the first place, in order to create a simpler tax system. But it should have been done in consort with raising the threshold so that those people who were no longer within the 10 per cent band did not face a doubling of the rate of income tax they paid on modest incomes.
	Similarly, with the reform of capital taxes, the idea of getting rid of the complex system of allowances, indexation and the rest was brilliant. I say all credit to the Prime Minister. I also agree that the Government were right to get rid of the artificial distinction between different classes of capital gains, different business assets and other assets. But where it all went wrong was that they used a simplification measure in respect of capital taxation to raise another £1 billion or so of revenue and discriminated against people who had built up businesses with a particular view of the taxation system. It would be much better to have a short-term capital gains tax with a taper which tapered to zero over, say, a 10-year period, to encourage people to make savings—the savings ratio has halved since 1997 under this Government—and to encourage people to take a long-term view of investments.
	I do not wish to add to the Government's difficulties, but it is not on just the 10p threshold that the Government will face problems. The changes which the present Chancellor made to capital tax will create another enormous problem. As regards the 10p band, poorer people have ended up paying more tax and richer people have benefited. The same thing will happen because of the capital gains tax reforms. The Chancellor has introduced capital gains tax at 18 per cent. People paying marginal rates of tax of 40 per cent will be besieged by clever people in the City with schemes to enable them to convert income into capital gains. It is a well known fact that the Tories did not abolish capital gains tax, much as we would like to in principle, because of the problem of leakage. If you have a lower rate of capital gains tax than the marginal rate of income tax, people will convert income into capital gains. I confidently predict that we will hear a lot about loopholes for the next three or four years arising from the Chancellor's foolish decision to make a change in the capital gains tax rate without having a proper taper and without matching the marginal rate with the capital gains tax rate.
	The way around this is to introduce a short-term capital gains tax, tapering perhaps to zero over 10 years and starting at the marginal rate of tax. If one did that, there is also an opportunity to abolish inheritance tax altogether by bringing in capital gains tax on death, which would get over the noble Lord's point that rich people do not pay inheritance tax. The people who pay inheritance tax are those whose main asset is over their heads. As we have seen in recent days, that for many people is a declining asset, but it is still substantial. By introducing capital gains tax on death, the main family home would be exempt, but any short-term assets which had not been held for 10 years or more would be subject to tax. We would then have a much fairer system, which would bring in revenue from people who are able to escape at present because they are able to order their affairs in such a way.
	I should like to say a bit about inheritance tax because I note that the Fabian Society, in a sort of last gasp, has come out arguing strongly in favour of inheritance tax in principle. I think that it is a wicked tax. It is double taxation in that it is a tax on money that in the main has already been subject to tax, and it does something very wicked: it encourages people to spend rather than to save. If someone has finished their working life, paid their taxes, has a capital sum, and then spends the money on floozies and Ferraris, there is no tax to pay. If they save it to pass on to their children, there is a tax to pay at 40 per cent. We then wonder why savings have gone down and debt has gone up in our country.
	I urge the Government to embrace the idea of a simpler, fairer tax system and look at what they have done in respect of capital taxes. At the moment their proposals will help those who have wealth and discourage those on lower incomes who wish to amass wealth and pass it on to their children, which is a basic human motivation. If we encourage people to save more and to take greater responsibility for their families in the long term, that must be good news for our country as a whole.

Lord Lee of Trafford: My Lords, I congratulate my noble friend on his choice of subject for the debate. For a number of years he has taken a deep personal and professional interest in the area of inheritance tax and capital gains tax. In the limited time I have allotted to speak, I want to focus on capital gains tax, and I appreciate the opportunity to be able to follow the noble Lord, Lord Forsyth, because a number of my points address almost precisely the areas he touched upon.
	In endeavouring to frame an ideal capital gains tax policy, one is seeking to get the balance right between five aspects. First, there is the desire to encourage businesses to be creative in terms of wealth and job creation, and to encourage the development of more family businesses in this country. When, for the sake of argument, we compare ourselves with Germany, we see that the strength of the German economy is due in part to the fact that it has so many more substantial family businesses that are passed down from generation to generation. Secondly, we want a society that favours longer term investment rather than the short-termism that I am afraid has dominated the UK economy over recent years, perhaps personified by hedge funds more than any other individual group. Thirdly, we want the ability to administer and calculate capital gains tax to be relatively easy. Fourthly, we want to encourage what I would call a savings society rather than one that focuses on debt and encourages borrowing. Fifthly, of course, there is the whole question of revenue raising. We must be conscious that the state has a responsibility to raise revenue from somewhere, and it is not unreasonable to look to capital gains to make its contribution.
	Until the recent changes made to capital gains tax, as the noble Lord, Lord Forsyth, commented, the whole system had become unduly complex with its taper relief and indexation. There was a clamour from both professionals and investors to simplify capital gains tax because it had become almost impossible to calculate and administer. However, I have to say that the Government handled the changes in a very ham-fisted way. They seemed to rush into making changes with hardly any consultation. While I welcome the entrepreneurial relief on the first £1 million of gains taxed at 10 per cent, I would have thought that in making those changes the Government would have appreciated what they were actually doing by going ahead with capital gains tax changes without bringing in some sort of relief to encourage the establishment of businesses. But thankfully the Government did respond to pressure.
	I have some sympathy with the Government because, had they announced in public that they were contemplating substantial changes to capital gains tax, there would have been considerable speculation and, in my judgment, enormous pressure on them to make an immediate announcement. In a way the Government were caught between a rock and a hard place. However, we have ended up in a rather ironic situation where capital gains tax on second homes has for many people been reduced from an effective rate of 40 per cent to 18 per cent. Whether a Labour Government are proud of bringing about such a reduction, I am not sure. Perhaps the Minister will indicate the Government's thinking on that.
	My preference, and again I align myself to some extent with the noble Lord, Lord Forsyth, is to bring back the differentiation between short- and long-term capital gains. I accept that short-term capital gains—those made in up to a year—should be taxed at the top rate, whatever it is. But for longer term gains—and we should be encouraging long-term investment—on assets held for over a year, I suggest a rate of 15 per cent. It should not be as high as 18 per cent or as low as 10 per cent, so 15 per cent would strike the right balance.
	Finally, I want to comment on the Alternative Investment Market. I am all for encouraging the creation of new businesses through tax incentives. The previous situation was that stock held for two years by the 40 per cent taxpayer attracted only a 10 per cent capital gains rate and was free of inheritance tax held for over two years. It is illogical that old established public companies—I had a number in my own investment portfolio and they are declared in the Register of Members' Interests—should purely by dint of shareholder vote be allowed to move across from the main market to the Alternative Investment Market and immediately enjoy the very attractive taxation advantage of the effective 10 per cent CGT rate and no inheritance tax if stock is held for two years. There was something rather odd in those advantages. The capital gains tax advantage has fallen away to some extent because the rate has gone up to 18 per cent, but the inheritance tax advantage remains in place.

Lord Northbrook: My Lords, first I declare an interest as the owner of land, property and equities. The House last debated this issue in February 2007, part of it being inheritance tax. It is interesting to reflect on what was said then and what has happened since. Essentially, the Minister said then on behalf of the Government:
	"We should not exaggerate the impact of inheritance tax".—[Official Report, 1/2/07; col. 465.]
	Perhaps he was concerned enough in private to help persuade the Government to make the key change in the Pre-Budget Report only a few months later which effectively doubled the exempt threshold to £624,000. Let us hope that, knowing his influence, the Minister's well judged public concerns on an unconnected matter—the abolition of the 10p income tax rate—will be met by a change in Government policy too. Of course, the Government's change of mind was also influenced by the Conservative Party's well judged announcement that the threshold would be increased to £1 million if and when we get into power.
	There have also been considerable changes to capital gains tax since February 2007. Initially, the joy for some people of the rate going down from 40 per cent to 18 per cent was tempered by the abolition of the 10 per cent rate for entrepreneurs. That is yet another example of the Government getting rid of a favourable tax rate that they themselves introduced. Only after a tremendous campaign by many business interests, and supported by notable Government spokesmen such as the noble Lord, Lord Jones of Birmingham, was the 10 per cent rate restored on the first £1 million of business gains. Nevertheless, buried in Table C6 on page 181 of the 2008 Budget Report is the real truth: the so-called CGT reforms are yet another stealth tax rise. Receipts from CGT are estimated at £4.8 billion for 2007-08, and £5 billion in 2008-09, although this last figure would have been even more at £5.4 billion, according to the 2007 Pre-Budget Report, had there not been the hue and cry over the 10 per cent abolition. Without this protest, the 18 per cent change would have represented no less than a 12.5 per cent tax take increase in CGT over the previous years.
	So let us now look at the two taxes as they stand. The inheritance tax exemption for 2008-09 now stands effectively at £624,000. However, as the noble Lord, Lord Burnett, rightly said in February 2007, unmarried siblings living together do not benefit from this change, neither do relatives and others who give live-in care for the elderly and the infirm. Despite the change to IHT, problems remain with the concept of the tax, many of which have been referred to by previous speakers in the debate.
	The Minister said in February 2007,
	"No Government recognises the concept of inheritance tax being double taxation".—[Official Report, 1/2/07; col. 466.]
	With the greatest respect to him, if you have paid out of taxed income or capital for an asset and then are taxed again at death, surely this can only be double taxation. It is not the same as his analogy between income tax and VAT.
	Other concerns mirror those of the noble Lord, Lord Burnett. As he said in February 2007,
	"there is considerable pressure on the elderly to gift assets early to avoid the tax and they do so far too early for their own good".
	The tax also militates against savings and investments. It encourages individuals to spend money rather than save it just to be taxed. As the noble Lord, Lord Burnett, stated—I am not sure whether this represents official Lib Dem policy but, as the noble Lord, Lord Burnett, stated,
	"we should encourage the entirely natural and praiseworthy ambition of most of us to work hard and save money to pass on these assets and cash on to our children and grandchildren".—[Official Report, 1/2/07; col. 452.]
	I agree with him also that the rate is too high, but rather than just alter the rate I would wish to do something more radical, as other speakers have suggested. The report of the noble Lord, Lord Forsyth, Tax Matters, suggests the abolition of inheritance tax and its replacement by a short-term gains tax. I support this idea. The suggested abolition is not only a Conservative idea but was also proposed by the former Labour Cabinet Minister Stephen Byers. In an article in the Sunday Telegraph in August 2006 he said:
	"It would be difficult to overstate the political impact of abolition of inheritance tax by a Labour Government".
	The Government should grasp the nettle. The move is costed in the Forsyth report at £2.6 billion but how would this be paid for? I would suggest two areas: first, by tightening-up the operation of the tax credit system more efficiently you would stop the over-payments, which I understand are running at some £2 billion a year; the rest of the sum I would make up by charging the carry interests on private equity funds to individuals' income tax rather than CGT rate. I cannot see any reason why the interests should be charged to capital gains tax. It would be a generally popular measure. In my view, the sector still pays too little tax compared to directors of its quoted rivals.
	Let us now turn to capital gains tax as a whole. The Government have cut the headline rate for some from 40 to 18 per cent. They have taken away the huge advantage of indexation and taper relief. This means, in effect, that long-term assets will in many cases be subject to more tax than previously. I believe this in essence to be wrong. It is much more equitable to follow the logic of the Forsyth report and levy a heavier tax on short-term gains, tapering the rate down to nil after 10 years. This is not just because it would favour me personally; the new 18 per cent regime favours short-term speculators. As other speakers have mentioned, the CGT regime should be more like France and Germany, where no CGT is payable if you hold assets for a longer period.
	In view of the fact that the receipts from IHT and CGT amount to less than 2 per cent of net tax revenues, there is no reason not to be radical about the reform. Clearly capital gains tax is necessary to avoid individuals turning income into capital, especially in the short term, and avoiding the tax altogether, but I do not believe IHT is necessary and it should be abolished.

Lord Shutt of Greetland: My Lords, I, too, congratulate my noble friend Lord Burnett on securing the debate. He made a useful contribution when he referred, particularly, to some of the problems he sees in the inheritance tax and capital gains tax regimes. Two Conservative Peers have given their views and although the noble Lord, Lord Forsyth, believes inheritance tax is wicked, even he would replace it with a capital gains tax on death. There is a general view that it is perhaps right that capital should be taxed, whether as an inheritance or as a capital gain. My noble friend could not resist the opportunity to refer to the 10p income tax rate and the non-domiciles—I, too, will not be able to resist saying something shortly—but those are other issues in our tax system at the present time.
	The noble Lord, Lord Forsyth, took the view that we should be looking at capital gains and felt that there was a sense that the present position was anti-business; that we should be looking particularly at the short-term gains rather than the long-term gains. My noble friend Lord Lee was also concerned about short-termism and about looking at both the short term and long term as far as gains are concerned, yet again acknowledging that revenue raising was important.
	The noble Lord, Lord Northbrook, and my noble friend Lord Burnett referred to families that are other than straightforward married couples and the problems that this can raise, particularly with a shared house, and all that that means for inheritance tax.
	The noble Lord, Lord Northbrook, on looking at the small print, found this figure of £4.8 billion, and £5 billion for next year. I think it will be a little more than £4.8 billion because many people have been rushing to pay. The regime lasted until 5 April, a few weeks ago, and therefore the Government's coffers may well be higher.
	The debate concerns plans for the future of inheritance tax and capital gains tax. It is interesting—the noble Lord, Lord Northbrook, mentioned this—that the Tories met at their conference on 1 October and said that they were going to change inheritance tax and have a £1 million threshold rather than £300,000. Lo and behold, nine days later the present Chancellor put out a statement that the £300,000 would be doubled to £600,000. Today it is £312,000, which can also be doubled. That may or may not have been right, but it surprises me that a big change in policy can occur in nine days; it is a wonder. Of course it may have been a fluke and it might have been going to happen anyway. We do not know that, but it might.
	Similarly, an announcement was made about capital gains tax and the 18 per cent figure, but no taper relief and no indexation. But indexation is still retained for companies. Then people went on about family companies and so on and we get this late change and a £1 million life-time allowance. Again I ask whether this has been thought through. The question that has come out is whether the capital gains tax regime is right and good to encourage the long-term investor. People have always taken the view that we should tax get-rich-quick merchants and short-termers, but it is important for the country and everyone that there is long-term investment. I hope that when the Government consider the future of these taxes they will think about the long term.
	The related matter that I wanted to raise was the whole business of intestacy, because the provisions regarding it are related to inheritance tax. On 8 September 2004 I asked an Oral Question on the subject, which the noble Lord, Lord Filkin, answered. He said he was going to consult. Then there was something of a delay. By 25 January 2005 it had not happened and the noble Baroness, Lady Ashton, had taken his place. Eventually a document was published on 7 June 2005—nearly three years ago. What do your Lordships think if we alter the intestacy figures from £125,000 to £350,000 and further changes? Still nothing has happened. I contrast that period of nearly three years with the nine days for the inheritance thing following that Tory conference.
	The major part of someone's capital is their house. My main concern is that this discussion about capital taxation involves the appalling position where someone could die without a will and only £125,000 can be guaranteed to the surviving spouse, plus half the rest only as a life interest, and the children get the rest. Of course most families would tend to sort that out, but if there are rapacious children about, that may well not be the case. Where capital taxation is concerned, this further issue should be taken into account.
	In the past century there were only seven changes in the intestacy rules, while I suspect that the capital gains tax relief changes every year. When we change the intestacy rules and we look at the figures, they should be linked in some way to inheritance tax reliefs. That would be one way in which we would not have to constantly be looking at this issue: link it to something that is already going to be there.

Baroness Noakes: My Lords, it is a pleasure to be taking part in this short debate, especially as the noble Lord, Lord Burnett, has again demonstrated his great expertise in tax matters. He surprised me a little with his digression into international tax avoidance. I also note that practically every noble Lord wanted to talk about the abolition of the 10p rate. I shall not be dealing with either of those matters tonight, but the Minister knows we will be returning to the 10p rate later this week.
	The noble Lord, Lord Burnett, claimed credit, to some extent, for the Government's adoption of his idea of the transferability for tax-exempt amounts between spouses.

Lord Burnett: My Lords, I am grateful for what the noble Baroness has said, but it was not my idea. It was my suggestion, but many other people have had that idea as well.

Baroness Noakes: My Lords, the noble Lord is quite right that he was the person who brought it to your Lordships' House, and he must therefore take some credit for it. I was going to go on to say that my own party claims the main credit for last year's PBR changes to inheritance tax, when my honourable friend George Osborne announced his policy of increasing the tax threshold to £1 million and pushed the Government into their own changes.
	We all remember those heady days last September, when the Prime Minister was set upon an early general election and the date of the PBR had been announced as the launch pad. But we announced our policy one week before, and it was hugely popular. The Prime Minister bottled out of an election, and all the talk was that the Treasury spent the whole of the weekend rewriting the PBR. This rushed policymaking led to the most chaotic set of tax changes that I can ever recall. The changes were driven by politics, not principle—I think the noble Lord, Lord Shutt, would agree with that analysis—and as the Government sow, so shall they reap.
	The IHT changes were accompanied by changes to the taxation of non-domiciled persons and to capital gains tax—all controversial and imperfect. I shall be talking later about capital gains tax; for now, I shall merely recall that the measure aroused the intense anger of the business community and led to the partial climbdown in January.
	So far as inheritance tax is concerned, the Government's proposals are useful in allowing married couples to avoid the nil-rate discretionary trust route, but that is about all. Our proposal for a £1 million exemption would remove 98 per cent of estates from the possibility of an inheritance tax charge. The Government's changes still leave significant numbers of people worried that they will fall into the charge in respect of their home, as other noble Lords have mentioned. As the noble Lord, Lord Burnett, and my noble friend Lord Northbrook have reminded us, the proposals do nothing for non-married persons sharing a family home: siblings, people caring for relatives or the disabled, or unmarried partners.
	There are many in my party, led this evening by my noble friends Lord Forsyth and Lord Northbrook, who would seek to abolish inheritance tax entirely. As they have said, it discourages saving and represents double taxation. We certainly do not rule that out, but the state of the economy when we come to power will be our first concern. Once we have dealt with that, we can then move on to the very long list of taxation wrongs that need to be righted by a Conservative Government.
	I return to capital gains tax. The Prime Minister earned much of his reputation for being pro-business when he was Chancellor by his introduction of the taper relief, which gave a 10 per cent rate. His successor has squandered all that goodwill. The new lifetime entrepreneurs relief, which he was forced into, is a pale shadow of the supportive capital tax regime that it replaced and will leave many entrepreneurs within the charge at the full rate. The Chancellor also turned a deaf ear to the hundreds of thousands of ordinary employees who will lose out with regard to their holdings in employee share schemes. There is no transitional relief, no transitional period, no grandfathering of reliefs already earned. It took until January, as I said, for the Chancellor to reveal the entrepreneurs relief.
	In the few weeks running up to the end of the tax year, we saw the inevitable rush of people selling ahead of the 80 per cent hike in the capital gains tax rate for business investors—including the noble Lord, Lord Sainsbury of Turville, who, according to press reports, saved £27 million in tax by so doing. We do not criticise any of those who sold last month, because they were merely acting rationally.
	At first sight, the Chancellor swept away a complex capital gains regime which owed much to history—it had 1982 re-basing; it had indexation; and it had taper relief—and that made the calculation of capital gains tax on long-owned assets very difficult. The flat rate of 18 per cent is much simpler in concept, but there is a problem with it. The previous regime, which owes its origins to the reforms introduced by my noble friend Lord Lawson of Blaby when he was Chancellor, taxed capital—once you had taken the reliefs—at the same marginal rate of income tax. That significantly reduced the incentive to shift income gains into capital. I completely agree with my noble friend Lord Forsyth that we can expect to see in subsequent finance Bills great swathes of anti-avoidance legislation on top of that which exists already, aimed at schemes designed to turn 40 per cent income into 18 per cent capital gains.
	We have seen all this before: the Government introduce a relief or a reduced rate of tax for apparently good reasons. They are then used in a way for which in the Government's view they were not intended, and so anti-avoidance legislation follows—often several generations of it. The result is something which starts simple and ends up generating its own huge amount of complexity.
	The Government have made a mess of their capital gains tax and have upset the business community. Their IHT changes have not taken away anxiety about inheritance tax bills from enough people. It was no surprise to us that eight out of 10 respondents to a poll in the City last month thought that the current Chancellor should go, and that a recent YouGov poll showed his approval rating at minus 42.

Lord Davies of Oldham: My Lords, I join all noble Lords in thanking the noble Lord, Lord Burnett, for introducing this most interesting debate, although he will recognise that including inheritance tax and capital gains tax in the Question has provided quite enough to bite off in the hour that we have available to us, and for a ministerial response of just over 10 minutes, without him then introducing some interesting reflections on other aspects of taxation. He will forgive me if I do not comment on those too much in circumstances where I want to concentrate on the main issues of the debate.
	However, a number of noble Lords, including the noble Baroness, Lady Noakes, who indicated that she might return to the issue later in the week, reflected on the tax package and the abolition of the 10p rate. I emphasise that I am not prepared to accept—I hope that I will have the opportunity later in the week to demonstrate it—that easy canard which has been reflected in several speeches this evening, including that of the noble Baroness, Lady Noakes; namely, that the poor have suffered from the Budget because of the abolition of that tax rate. We have introduced a wide range of compensatory measures, particularly in terms of tax credit changes, to ensure that the bottom deciles, the poorest-off in the population, gain from this Budget as they have gained from preceding Budgets under this Government. It is quite clear that a section of the population has not gained, and that is the one to which the Chancellor is now addressing the major part of his concentration.

Baroness Noakes: My Lords, the noble Lord provokes me so much. He has chosen to major on the 10p tax rate. Will he remind the House how many individuals lose out after compensating changes from the abolition of the 10p rate?

Lord Davies of Oldham: My Lords, we will return to that matter in detail later in the week. The noble Baroness and one or two other noble Lords were generalising in saying that the poor have suffered from the Budget as a result of this change. I emphasise that the poorest section of the population did not lose out, and she will recognise the categories into which they fit. I will have the time to expand on that later.
	The noble Lord, Lord Forsyth, played entirely fair, although he was as controversial as ever, by concentrating on the significant issues which the noble Lord, Lord Burnett, emphasised in his speech—inheritance tax and capital gains tax, and it is those which I must address. It is of course true that the changes to inheritance tax were not the product of immediate thinking within the Treasury; we have clear records of work on potential changes to inheritance tax which long preceded the autumn of last year. It is not conceivable that changes can be effected in those terms without necessary preparation. The Government have made it clear that these concepts were before the Chancellor well before they became public in the autumn of last year.
	We were concerned to respond to what the noble Lord, Lord Burnett, described in his debate last year as the advantages of simplification of the tax system. I know that the noble Lord, Lord Northbrook, has waxed eloquent on this matter in the past, to say nothing of the noble Lord, Lord Forsyth, and the noble Baroness, Lady Noakes. The noble Lord, Lord Forsyth, was entirely fair in his recognition that that principle underpins changes to the inheritance tax and to capital gains tax. Through a process of simplification, there are bound to be rough edges to the policy and a consequential impact on the wider society that the Chancellor has to take into account. The noble Lord, Lord Northbrook, suggested that I commented on the limited impact of inheritance tax last year in the debate that the noble Lord, Lord Burnett, introduced. That is certainly so; at that time we thought that in the analysis about 6 per cent of households paid inheritance tax, whereas we now regard it as being about 4 per cent. So I am entirely justified in indicating that the role of inheritance tax can be greatly exaggerated.
	As for the concept of fairness in society, I must say to the noble Lord, Lord Forsyth, that it would be a bold Conservative shadow Chancellor indeed who actually campaigned in an election for the abolition of inheritance tax and was able to sustain the argument that it created fairness in society. That would be a difficult one to present. I hear what the noble Lord says about there being other ways in which to handle the matter—but I noted that the noble Baroness, Lady Noakes, speaking from the Front Bench, had her reservations about such a radical proposal. That reflects the fact that the Labour Government have got the issue right and that we need to take into account the fact that property prices in the past decade have enhanced the assets of the nation, with a greater number of people falling within the framework of inheritance tax. Nevertheless, the tax is fair—and it is also progressive, because it bites more heavily as the assets that are being taxed are affected. Therefore, the Opposition would have a difficult job of sustaining the argument that the noble Lord, Lord Forsyth, put forward with his usual eloquence and in the most interesting way.
	On the capital gains tax, once again the Government are being challenged on doing what they are constantly being prayed to do on opposition Benches—simplifying the tax system. It will be appreciated within that framework that at 18 per cent Britain has a highly competitive rate of capital gains tax. There is no mention in this debate—although the noble Lord, Lord Burnett, sought to extend this issue with regard to certain aspects of international comparisons—of the extremely favourable taxation position that Britain has on taxes on entrepreneurs and asset holders. The only way in which we have been able to build up the strength of the economy over the past decade is to be internationally competitive in those terms.
	I hear the challenges about the costs that certain processes of simplification have inevitably brought about and the difficulties consequent on that that need to be worked through, but I maintain that the Chancellor's position is one that responds to what the noble Lord, Lord Lee, emphasised: the general clamour for simplicity and the recognition that people should know the basis on which they are subject to taxation.
	It will be appreciated that the new straightforward rate is complemented by focused tax relief for entrepreneurs, which is available on the disposal of a trading business or shares in a trading company, provided that the person who makes a disposal is an officer or employee of the company and has a minimum 5 per cent stake in the business. In these cases, the entrepreneurs' relief reduces the effective tax rate to 10 per cent for the first £1 million of gains. That is a recognition of the necessity of giving support to entrepreneurs building up a business—and I think that the Government's recognition of that necessity has been widely appreciated.
	The noble Lord, Lord Shutt, has to a degree thrown me over the question of intestacy, largely because it is not a Treasury issue. The responsibility for rates of intestacy belongs to other aspects of the Government. I hear what he says and understand his complaint. I will write further to him on the matter. I hear his anxiety about the fact that only £125,000 is guaranteed whereas under inheritance tax we are talking about something much higher. I hope that he will appreciate that within the framework of this debate it is difficult to make relevant a discussion on intestacy. He has raised an important issue and deserves a reply. I guarantee to reply to him on that detail.
	In summary, this has been a most challenging and interesting debate. My humble 12 minutes has been cut down to 10 because of the contributions of others in the debate. We have all enjoyed those contributions; they have been well worth while. I apologise if I have not covered every issue and will write to noble Lords accordingly.

European Union (Amendment) Bill

House again in Committee.
	Clause 2 [Addition to list of treaties]:

Lord Pearson of Rannoch: moved Amendment No. 5:
	Clause 2, page 1, line 12, after "excluding" insert—
	"(i) Article 1, paragraph 4, replacement Article 2, in so far as it concerns the promotion of economic, social and territorial cohesion and solidarity among the Member States, and(ii) "

Lord Pearson of Rannoch: This is an innocent little amendment to start us off after the dinner break. Its purpose is to withdraw our regional funds and our economic and social funds. I put it down because I would like to test the present position of the Government on the regional policy for funding and I would like to test the Conservative Party on its latest position on repatriation of social and labour policy.
	I start with a quotation from the present Prime Minister, Mr Gordon Brown, when he was the Chancellor of the Exchequer, as reported in the Times on 6 March 2003. I know that we have given up doing foreign quotations this evening, but I thought that one from no less a personage than the then Chancellor of the Exchequer, the current Prime Minister, might be a reasonable yardstick to test the Government's present position.
	On 6 March, Mr Gordon Brown said:
	"When the economic and social, as well as democratic, arguments on structural funds now and for the future so clearly favour subsidiary in action, there is no better place to start than by bringing regional policy back to Britain".
	That in the clearest possible terms is the present Prime Minister saying that he thought regional policy should be repatriated to the United Kingdom, with which I and my colleagues agree. The purpose of putting down the amendment is to discover whether the Government still agree with that.
	This is a useful amendment because it is the whole of Article 2 of the new treaty, which is all about combating social exclusion, discrimination, promoting social justice and protection, equality between men and women, solidarity between generations, protection of the rights of the child, and so on. I could go on. I know that we are anxious to make progress so I will not go further. Clearly, it opens the way to invite the Conservative Party to say where it stands on one of the only two policies it has announced towards the European Union, were it to be so fortunate as to win the next election. One is that if this treaty goes through, it
	"would not let the matter rest there".
	I do not want to press the party on that.

Noble Lords: Oh!

Lord Pearson of Rannoch: Well, we will see. It depends on what it says. But under the strict terms of this amendment—I know that the Lord President is keen that we should stick to the amendments now as we wandered a bit before dinner—I ask the party whether it still wishes to repatriate social and labour policy after it wins the next election and how it proposes to do it. I fear that the length of this amendment will depend on the answers to those two questions—one to the Government and the other to my former noble friends. I beg to move.

Lord Willoughby de Broke: I support my noble friend's amendment. I shall read out one or two quotations but I am sure that the Lord President will not mind because they are from a report of the European Union Select Committee on the future financing of the EU. That committee was chaired by the noble Lord, Lord Radice, who I am very pleased to see in his place. Among other things, the committee discussed cohesion and structural funds. It was a brief but very good report which stated in one of its conclusions:
	"We believe that the proposals to continue funding regional development after 2006 are inconsistent with the principles of subsidiarity".
	Neither was the committee at all supportive of the Commission's view that the latter was better placed than member states to run regional development funds. According to the committee, the member countries could run those themselves. I agree wholeheartedly with that. The report also states:
	"We believe there is a strong case under the principle of subsidiarity for national governments to fund and manage their own regional policies".
	That could hardly be clearer. This is a helpful amendment for the Government because it is the European Union Committee's own recommendation that regional policies and the cohesion fund should be funded by member states and that we should not pass lots of money over to Europe for this to be done through the Commission. That will give some comfort to the hard-pressed British taxpayer who resents giving money over to the Commission whose accounts have not been passed by its own Court of Auditors for the last 11, 12 or 13 years. I am sorry that the noble Lord, Lord Kinnock, is not present as he would correct me. I think the figure is 13 consecutive years. I see that the noble Lord, Lord Radice, wishes to intervene.

Lord Radice: The noble Lord quoted accurately from our report. I am glad that he approved of it. However, it is a little more complicated than he suggested. We also said that EU cohesion funds should be spent in the poorer regions of the states that were joining then. We did not suggest cutting off the funds just like that. The noble Lord rightly said that there is a case for the principle of subsidiarity to operate in the richer states and for national Governments to fund and manage their own regional policies. But we then went on to say that there are tremendous gains to be made from enabling the new member states to catch up towards the average level of wealth in the Union. So it is a slightly more complicated argument than the noble Lord suggested.

Lord Willoughby de Broke: I am grateful for that intervention. It may be more complicated, but the real issue is whether it should be up to the elected British Parliament, or Westminster, including the House of Lords, to decide how taxpayers' money is best spent, and not to hand it over to the European Commission to spend as it sees fit. I do not want to make a point of this but we know that it is misspent. Let us not say there is fraud but there are irregularities in the European Union accounts—let us put it that way—which is why its own Court of Auditors has not passed them for 13 years. Surely it is better for Parliament to decide how to spend British taxpayers' money on regional and cohesion funds than for it to be handed over to an organisation, the directors of which would probably have been imprisoned by now had it been a private company. Certainly they would have had their collar felt in one way or another. I strongly support the amendment, and I hope that it will find favour with the Government as it has the European Union Committee stamp of approval.

Lord Lea of Crondall: In response to the noble Lord, Lord Pearson, this is the first of a number of amendments which propose that after "excluding" a new clause, in effect, should be inserted. I was interested in the formulation proposed by the noble Lord, Lord Pearson of Rannoch, in challenging the Conservative Party to say what it would do about the Social Chapter, which strictly has nothing to do with the treaty. The same point arises in respect of like amendments: what would happen if such an amendment were agreed to?
	They are all spoiling amendments in the sense that they are meant to wreck the Bill. If you purport to put new articles into the treaty at this stage, clearly that means that Britain is in a difficult position, and that is the intention of going back to say, "We do not accept the treaty in its present form". I ask whether a string of 20 or 30 debates that take this sort of form, although they are perfectly acceptable in terms of House of Lords procedure, do not all run up against the fundamental fallacy that such amendments could be compatible with us ratifying the treaty. It would be more straightforward if whoever is introducing this string of amendments were to say, "Our intention here is to make sure that Britain is in an impossible position in having the European treaty ratified".

Lord Pearson of Rannoch: I am grateful to the noble Lord; I will just answer that point. He is not quite right. Our purpose in moving the amendments is to make sure that we debate and put in front of the British public many of the wholly unacceptable aspects of our membership of the European Union, and this happens to be one of them. Nor is he entirely right to say that if we were to accept one of these very sensible amendments, which I think would be hugely popular with the British public, that that would be the end of the treaty; it would not be. They would simply have to convene another conference and agree it unanimously; it is as simple as that. If they do not, does not that confirm our opposition to the whole project and exercise and that the quicker we get out of it the better?
	Why should we be subjected to a regional policy where billions of pounds come to us under the direction of the organisation in Brussels that fails to get its accounts audited for 13 years on the trot? We then have to accept what it spends money on—I am talking about regional policy now—and then we have to put in an equal amount to what it puts in. That is madness economically, it is damaging to the country and the quicker we stop it the better. That is the point of the amendment.

Lord Lea of Crondall: The noble Lord, Lord Pearson of Rannoch, is confirming my contention that right through the next three hours, three days, three weeks or whatever it is, we will be dealing with amendments that could be looked at on their merits one by one, but the effect of any of them would be that we had to go back to renegotiate the treaty.

Lord Blackwell: We really cannot have a sensible debate on the treaty if we take the view that any amendment that attempts to probe the meaning of particular phrases is out of order because we have to accept it all en bloc or not. Whatever the intention of any of the amendments may be, we should take the purpose of this debate as being to explore the meaning and impact of the treaty and whether it is something that the UK should be satisfied to sign up to.
	On that basis, it seems to me that there are two interesting points in the amendment. First, there is the point raised by the noble Lord, Lord Pearson, on the effectiveness of economic, social and territorial policy and the meaning of the word "solidarity". I agree that there are great failures in the way in which that policy currently works; there are many better ways of achieving the objective of helping the poor countries in the European Union develop.
	The amendment exposes a broader point. If I understand the numbering, it refers to the consolidated treaty's Article 3—to which I referred in my Amendment No. 125, which we discussed before dinner—which sets out the objectives of the European Union. Following the response of the Lord President to that amendment, I am now confused and concerned about the status of these objectives in their totality, of which this is one element. Is the wording critical in terms of how the courts might interpret the objectives and how the competencies of the European Union might develop? Should we study them carefully or are they a meaningless preamble which we can disregard as simply the high-flown rhetoric of the European Union? The Lord President's earlier response suggested that the wording of the objectives may have a very real impact on the legal status of legislation in the European Union and the scope of what can be done in the UK.
	The noble Lord, Lord Pearson, has picked out one particular aspect of the article, but we need to understand exactly the implications of all the objectives set out in it and the extent to which they may have an impact on the UK.

Lord Tomlinson: I think that my noble friend Lord Lea is too gentle on the noble Lord, Lord Pearson, in trying to have a rational debate with him. This is not a matter of rational debate—it is blind, naked prejudice. It shows through not only in the noble Lord's amendments but in his words. When he was having his exchange with my noble friend—I know that the noble Lord was addressing the House, but it began to appear rather like a dialogue—he said that his amendments are meant to expose the problems of our membership. I shall not challenge him;I shall be voting against all his amendments. The real challenge comes from the noble Lord, Lord Howell. Is that what he supports? He stood up at the beginning of the debate, brandishing his good, solid, pro-European credentials. By his own admission, the noble Lord, Lord Pearson, has put down a series of wrecking amendments. We should put him out of his misery and tell him that they will not be supported, and then we can make some progress.

Lord Pearson of Rannoch: I must respond to the point about prejudice. We are dealing not with prejudice but with reasoned opposition to the project of European union, of which we do not wish this country to remain a part. We believe that that is to the benefit of our country, our economy and our constitution.
	I have tabled the amendments to expose just some—a very few—of the worst aspects of this project so that we may debate them and see whether the noble Lord and his Europhile friends are right in saying that they are part of this wonderful project of which we should be part. We are saying that they are not. Collectively, the amendments add up to saying that the quicker the country gets out of this, the better.

Lord Jay of Ewelme: I hope that Members of the Committee will forgive me if I focus on the amendment before us. I oppose it on the rather simple ground that I believe that the cohesion funds of the European Union are a good thing. They have helped, and will continue to help, the development of the poorer regions and countries of the European Union. That will, in turn, make the single market more effective than it would otherwise be, which is in the interests of the British economy and British business. For that rather narrow reason, I oppose the amendment.
	Before I sit down, I should perhaps declare an interest as a vice-chairman of Business for New Europe. I also declare an interest as receiving—and being proud to do so—a British Government pension. However, for the avoidance of doubt, as the lawyers say, I am not in receipt of a European pension.

Lord Dykes: Inspired by the very sagacious, although brief, contribution of the noble Lord, Lord Jay, perhaps the natural wisdom of the Liberal Democrat Benches on these European matters can be deployed tonight to provide miniature arbitration between the noble Lords, Lord Tomlinson and Lord Lea of Crondall. Although the noble Lord, Lord Lea, was not sufficiently severe on the noble Lord, Lord Pearson, for proposing this extraordinary amendment, none the less we would all defend the right of the noble Lords, Lord Pearson and Lord Willoughby de Broke, and others to say what they want in these debates when proposing amendments. That is the natural right of Members of both this House and the other place, so perhaps the noble Lord, Lord Tomlinson, was being a little too brutal. Normally he is not like that at all—he is a very gentle person. However, on this occasion the noble Lord, Lord Pearson, misused the opportunity by misquoting, as usual, but we were pleased to note that he challenged the Tories on their views.
	The Tory views on the cohesion fund and the social fund and their future are rapidly approaching those of UKIP. Indeed, a whole series of amendments was tabled in the other place and adopted by the Tory Front-Bench spokesmen in this House. We are now at the beginning of the amendments that start "Page 1, line 12" and go on to refer to Article 1. This is not a Tory amendment; it is in the name of the noble Lord, Lord Pearson, so he cannot be accused of plagiarising anything from the other place. However, the long list of Conservative amendments referring to line 12 followed by the word "excluding"—the exclusion zone, one might say—are all, as we know, taken word for word from the amendments tabled not only by the Conservative Front Bench in the other place but by what a few years ago were the dastardly rebels on the Conservative Benches. I refer to the anti-Europeans Mr William Cash and Mr David Heathcoat-Amory, who I think are the two gentlemen responsible for 80 per cent of the contributions and amendments made in the Committee stage of the whole House in the other place.
	It is a very sobering thought that the gap between the official approach of the Conservative Party on Europe and on individual detailed European policies and the approach of UKIP is rapidly narrowing to the width of a cigarette paper. It may not be quite there yet and there may be some small exceptions to some policies but in general the Official Conservative Opposition is now deeply rooted in profound hostility to the European Union in respect of the exciting new proposals in the modest Lisbon treaty, which is very far from being a constitution. We know that the noble Lord, Lord Pearson, referring to the replacement Article 2 and changing paragraph 4—unfortunately my spectacles are broken so I shall have to guess the words—wants the Government to move away from supporting in the European Union what the cohesion fund and social fund will do in the future.
	Article 1 in the old text concerning the competencies of the Union and Article 2 concerning the objectives, the cohesion policy and the solidarity of policy are agreed policies of the sovereign member states of the European Union, and they have what I hope is the understandable enthusiasm of the British Government. Therefore, we on these Benches accept that those would be good things to keep. As one or two other speakers have already said, there is a natural role for the Commission in funding these policies at the margin in the member states. I think, in particular, of the 10 or 12 new member states but mostly I think of the eastern European states which need a lift-up to reach the average on incomes, wealth and output, as well as Latvia, Lithuania and Estonia.
	Around 35 per cent of the total EU budget for 2007-13 is allocated to the structural and cohesion funds, some £7 billion of which has been reserved for projects in the United Kingdom. Therefore, tonight we note that the noble Lords, Lord Pearson and Lord Willoughby de Broke, with enthusiasm, wish to abolish that effort. Those funds would not be repatriated in the sense that the British Government would immediately pick up the tab—that certainly would not be the case—but there would be a loss of funds to the areas in the UK which need that assistance. The cohesion fund is available only for those member states with a gross national income per inhabitant of less than 50 per cent of the EU average.
	We Liberal Democrats believe that a regional policy developed at the European level has a very important role to play at the margin. This is a modest amount of money in comparison with what the national member states all spend on economic rehabilitation and resuscitation of weaker areas and in ensuring that the EU remains competitive and attractive in today's globalised environment.
	EU regional policy promotes convergence within the EU, which is necessary if Europe is to maximise its strength. That has always been a sacred principle. It is only reiterated in the Lisbon treaty and advanced by way of the objectives, albeit couched in fairly vague language. The reference to solidarity can mean a number of different things to different people, but in specific policy terms it means the ancient and respectable principle of redistribution to help poorer areas, poorer families and poorer villages and towns enshrined in the statutes of the EU as well as in those of the national member states. We repeat again and again to reassure our hesitant and nervous UKIP colleagues that the powers therein are conferred only by the will of the sovereign member states. There is no excessive use of power emanating from any other source whatever. That is why we support that policy with enthusiasm. Therefore, when the Minister replies on this very dubious, shaky and unnecessary amendment, we hope that she will also endorse the Government's enthusiasm for the same objective.

Lord Stoddart of Swindon: Perhaps I can get a word in now. I tried to intervene on the dispute that arose about the way in which we handle this debate and this Bill. We have to do it this way because every single treaty since the 1972 European treaty is simply an amendment of that treaty. We have to do it this way because it is not the treaty that is before us to be ratified. If the Government did it that way, it would be perfectly in order to try to alter the treaty. Because of the method used by the Government to get the treaty through, we have to do it this way, which I agree is a bit convoluted. That should not prevent us discussing every item in the treaty, including the one that we are now discussing, which is the social and cohesion aspect.
	We were taken into the Common Market on the basis that we were joining a trading organisation. We now find that within that trading organisation, instead of competing with our competitors we have to subsidise them. That is what the European regionalisation policy means. Funds from this country, which could be used fully in this country, are instead used to subsidise other countries that may be thought to be poorer than ourselves.

Lord Sewel: Does the noble Lord accept that if gross national income or GDP increase in those regions that are lagging behind, that creates, as the noble Lord on the Cross Benches said, a much greater and more real single market, the product of which is increased demand for British goods? It is Britain—the United Kingdom—that benefits from the increase in the wealth of those regions that are being brought up through the cohesion funds.

Lord Stoddart of Swindon: If that were the case I would be happy, but unfortunately the deficit in trade in the past 35 years has been increasingly large. The deficit in our trade for the last period—2006—was no less than £38 billion a year. What we have been doing has not necessarily helped our trade balance, which is the important element in the profit and loss account when trading. I cannot accept the noble Lord's argument.
	Charity begins at home—at least, I believe that it does. We have been talking about deprived areas in the European Union. There was a table in yesterday's Daily Express—

Noble Lords: Oh!

Lord Stoddart of Swindon: I read all the newspapers. That is why I have such a broad mind. In any event, the article was probably in other papers as well. It just so happens that this was handed to me today. It appears that in spite of all the largesse that we are supposed to be getting from the European Union there are areas in Britain that are very poor indeed.
	For example, the table shows that in Merthyr Tydfil 20.7 per cent of the population draws benefits. In the Rhondda, where I was born, 17.1 per cent of people draw benefits. In Liverpool, the figure is 17.6 per cent. So that I can cover the United Kingdom, the figure in Glasgow is 17.1 per cent. There are many poor people around who could do with some of the money which in net terms we pay over to the European Union every year. This year the amount will be £4.5 billion and by 2011 it will be £6.5 billion in net terms.
	Those of us who have some doubts about our membership of the European Union think that that money would be better spent in providing jobs and services to people in this country. I believe that it is better for nation states to handle their social and regional employment matters on a nation-state basis. We did it pretty successfully as the noble Lord, Lord Lea of Crondall, will know, because he was the deputy general secretary of the Trades Union Congress and he knows perfectly well that past Labour Governments have done their best to see to it that the regions are financed well from the national Exchequer. We could begin rebuilding our manufacturing industry—the TUC is very much in favour of that. We could use regional funds that are perhaps wasted elsewhere to build up our resources and industry in this country.

Lord Howell of Guildford: I shall not get involved in the substance of the amendment and shall not support it. I will keep my head down to allow the flak to fly from the hardline withdrawalists sitting behind me against the entrenched position of the Brussels apologists who seem to agree that everything that comes from there is perfect. It seems to have escaped the notice of some Members of the Committee that although many amendments on these issues may have been tabled in the other place they were not debated. Very few amendments were debated, and that is precisely the complaint of the newspapers and the public and, indeed, of Members of all parties, including the Government party. These matters were not debated. We were urged by the Prime Minister to look at them line by line. It is particularly sad on an issue such as this, which does not seem to have a direct connection with the proposals in the Lisbon treaty, although it has a direct connection with the evolution of the European Union. There is a lot of new thinking. Commissioner Hübner has said that there is a need to adjust this policy—she means the EU regional policy and the cohesion fund policy—to the entirely new conditions of global trading. Energy issues, energy security, climate change issues, the internal market, the demographic challenge and entirely new approaches to overseas development are now bearing in on the policies of the past, and I am sad to hear them being dogmatically defended—along with a lot of nonsense of the kind we have just heard from the noble Lord, Lord Dykes, about our position, which was quite misleading and incorrect—and to hear that kind of debate going on in your Lordships' House. We ought to be able to get hold of the new issues and realise that we need to have new thinking about them instead of doggedly defending the past. That is a great pity and very much to be regretted.
	The other thing that shocked me a bit in the final 20 minutes of the debate was the attitudes of the noble Lord, Lord Lea, whose views I normally admire, and the noble Lord, Lord Tomlinson, whose views I enjoy but do not necessarily agree with, about the procedure. They seemed to be saying that they wanted to close the debate down. They know perfectly well that if we are going to look line by line at the treaty, we have to table amendments. I said at the beginning that we know that we cannot change the treaty; it is given to us and there is nothing we can do about it except that in due course there will be other treaties and these matters will be reopened because they will not be settled by this. There will be more vigorous debates and more successful negotiating under a Conservative Government in the future than there has been under this rather deplorable and now dying Labour Government. That will happen. That is certainly so. However, the idea that we should therefore not debate these matters at all when they have not been debated in the Commons is quite shocking, and I am sorry to hear those two, usually excellent, Lords suggesting such a proposition.

Lord Lea of Crondall: I shall return the compliment and say that, generally speaking, I admire the attitude of the noble Lord, Lord Howell, in debate, but I did not say, and nor did my noble friend Lord Tomlinson, that we did not think these matters were worth discussing. However, as this is the first of a string of amendments taking the form that, after "excluding", other words be put into or taken out of the treaty, the effect of such amendments should be pointed out at this stage. That is all that I said. I shall leave it there.

Lord Howell of Guildford: I appreciate that that was what the noble Lord thought he was saying, but I made exactly those points at Second Reading and at the beginning of Committee this afternoon. They are perfectly clear to everybody; we cannot amend the treaty. I thought it was clear to most people that if we are to examine this line by line in the interest of the public—the wider public who look on Parliament askance at the moment because we let so much through—the only procedure is by tabling amendments of this kind. There are amendments that can improve the Bill without changing the treaty, and we will hope to have some support from free-thinking Members from all parties for those. We shall see. These are ways of examining the treaty. They are perfectly accepted ways. They were explained very clearly at the beginning, and the fact that they were raised again by the noble Lords, Lord Tomlinson and Lord Lea, alarmed me a bit because it sounded as though they were gunning for us and were not in favour of full discussion of this treaty. I accept from what the noble Lord, Lord Lea, said that he did not mean that, but that is what it sounded like, and I felt I had to intervene to say that. These are the only comments I wish to make on this amendment, which we shall not support.

Baroness Ashton of Upholland: This is another interesting debate. I shall add my pennyworth to the issue of procedure. I am in the hands of your Lordships. We shall discuss whatever your Lordships wish. The only constraint we have is that we have, by mutual agreement, said that we should do this within six days, so my concern is twofold. First, we perhaps range far too wide on our discussions, and I hope we can do exactly what the noble Lord, Lord Howell, said and look at these issues in detail and in so doing confine ourselves to that. Secondly—this may refer to this amendment—there are some amendments where we could usefully have half a day's debate on the issue. They are not directly about the treaty, but they are not unimportant by any stretch of the imagination. A discussion about the whole way in which structural funds are used is worthy of a much bigger debate in your Lordships' House as well. I take nothing away from my desire to do that at 9.10 pm on the first day of Committee, but, from my perspective, we might have got more out of it.
	I begin with the comments of my right honourable friend the Prime Minister, who was, when he made the comments, the Chancellor of the Exchequer, and then relate that to where we are in structural policy. The article to which the noble Lord, Lord Pearson, referred was in 2003, in the Times, which I think he followed up by a television appearance. My right honourable friend was debating how best to deal with funds designed to support regional development in nation states that were not among the poorer members of the European Union. To put the issue in a nutshell: is it better for nation states to think more strategically by funds coming directly from the centre to regions?
	Noble Lords will know that my right honourable friend is a great believer in devolving funding through the devolved Administrations and through the regional development agencies. That was the point that he was getting at: is it better for us to do it nationally and take control of that and prioritise it—while still being very much part of developing the structural funds of the European Union—but especially thinking of those nations which we are trying to raise up to a better standard of living, and to deal with some of the structural issues from which they were suffering? That debate has continued since 2003. Indeed, the Government have been in discussion about how we might do that.
	The noble Lord, Lord Willoughby de Broke, referred to the European Union Committee report. At paragraph 150, it states:
	"Using the same logic which argues for shifting the burden of financing the Common Agricultural Policy back towards the Member States, we believe there is a strong case under the principle of subsidiarity for national governments to fund and manage their own regional policy. There is no collective benefit of EU-funded income transfers between richer Member States—which could and should be funded nationally—whereas there are tremendous gains to be made from enabling the new Member States to catch up towards the average level of wealth in the Union".
	We know that the Prime Minister—as he now is—has continued to develop that. The rules have been changed quite significantly for the funds for 2007-13. A much more strategic approach has been introduced with a much closer alignment between regional, national and EU priorities. We have moved in the direction that the Prime Minister, as long ago as 2003, suggested was right to approach this—for nation states to be more highly involved in determining development in their regions but still to support the structural funds.
	It is probably worth saying something about our objectives for the cohesion policy for the next few years, as this is an area in which I know that noble Lords are interested. Noble Lords know the purpose of the cohesion policy and structural funds, which is to reduce economic disparities. I have as much information as noble Lords can stand about the benefits in each of the regions of the UK in the opportunities that have been provided through finance to provide jobs and opportunities, from jobs in industry to, for example, jobs in the Prince's Trust, which has been able to provide particular opportunities for young people. I will not go into the detail, but I am very happy to provide it for noble Lords because it is an interesting read.
	Let us look at the objectives. The first is convergence, which helps the least developed member states and regions catch up more quickly with the EU average. We do that by trying to improve the conditions for growth and employment. The second objective is regional competitiveness and employment, to strengthen the competitiveness, employment and attractiveness of regions other than those that are the most disadvantaged. The third objective is European territorial co-operation, which strengthens cross-border, transnational and inter-regional co-operation. Those are very important. The noble Lord, Lord Blackwell, was worried about the notion of objectives, and perhaps about their status. He will know that they are not new; they exist in EU and EC treaties. I suppose that I would describe them as providing a kind of overview of the aims and tasks of the European Union. In the individual articles, one can see the details of the powers and the policies, but perhaps the objectives are part of the interpretation of what we seek to achieve and what we hope we can do as a consequence of some of the changes that have been made in this treaty.
	There is no difference in terms of where the Government believed in 2003 that it was important to put their focus. They said, in effect, that where nation states could devolve their ability to support regional development in the broader sense to the devolved Administrations, they should do so. Equally, it is very important, as part of the European Union, to support member states. One has only to look at the support that has been given to some of the newer member states and the trade and development opportunities that have arisen for the UK. I think noble Lords would see that there is a huge economic benefit to this country as well as to those members of the EU.

Lord Pearson of Rannoch: I thank all noble Lords who have contributed to this debate. The noble Lord, Lord Jay, praised the cohesion funds. I confess at once that the aim of the amendment was not to get at cohesion funds but to get at regional funds, the Labour Party's attitude to them and to social and labour policy and the Conservative Party's attitude to that. However, I say to the noble Lords, Lord Jay, Lord Tomlinson and Lord Sewel, that the well known Europhile theory that giving lots of money to the poorer countries in the European Union is eventually good for the British economy is at least debatable, and debatable at much greater length than we have time for now. It does not ring true with many of us who have run international businesses in the real world and who tend to feel that much of this money should go to regions in the world that are poorer than the ones to which it actually goes, and that the United Kingdom would do far better to escape from the overregulation of the European Union and all that goes with it and to take its place in the world beyond the recipients of the cohesion funds—the world of China, India and so on.
	As I say, the amendment is really aimed at the Labour Government's response to Mr Brown's suggestion that regional policy should be repatriated. I should say in response to the noble Baroness the Leader of the House that Mr Brown used the word "subsidiarity" in the quotation that I gave at the start of the debate on the amendment. All I can say is that we in the UK Independence Party thoroughly approve of Mr Brown's proposal that regional policy should be repatriated.
	As to the Conservative Party, I think that we have taken on board its answer to the question that I put to it. I thought I knew what it was going to be, and I accept that it is, "We would rather not talk about it". That is fair enough, but one day it will have to.
	Finally, the noble Lord, Lord Dykes, once again used the expression "sovereign member states". He said that this project—I trust that I have made it clear to the noble Lord, Lord Lea, and others that we object to it—is merely sovereign nation states getting together and deciding things. I do not want to prolong the debate—we will come back to it—but I ask how a nation can be sovereign if most of its national law is made beyond its reach and beyond the reach of its elected representatives. The continued use of "sovereign nation" to describe the United Kingdom perhaps does not reflect the reality of the position to which we have been unfortunately reduced by our membership of the European Union. Having said that—

Lord Kinnock: Although the hour is late, I wish to say to the noble Lord that it would not be possible for 27 democracies to resolve upon a common course in respect of the treaty or of the policies that unfold week by week, day by day, unless they were able to exercise those decisions as sovereign democratic states. The collective or pooled sovereignty is what they have resolved upon to try to deal with issues that are beyond the will—the determination—of individual states, no matter how big or how strong or how small or how poor. That is the reality that they confront and how they choose to exercise their sovereignty.

Lord Pearson of Rannoch: I am most grateful to the noble Lord for that eloquent exposition of the problem. I must put it to him, in words used by my noble friend Lord Willoughby de Broke in our Maastricht debates, that sovereignty is like virginity: you either have it or you do not. As members of the European Union we do not have it. Our Governments—our Executives—take part in the process which the noble Lord has just extolled. But the people, beyond electing the Governments of the day every five years—this subject has not appeared in general elections for many years—are not involved. The sovereignty of the United Kingdom belongs to the people.

Lord Kinnock: Is the noble Lord saying that he wants to replace determination by the Executive nationally and internationally with a series of regular plebiscites that consults directly with the determining will of the people? If he is, he is proposing a change much more revolutionary than anything contained in all the treaties of the European Union added together and multiplied by 1,000.

Lord Pearson of Rannoch: As a matter of fact, I am grateful to the noble Lord, Lord Kinnock. If he had read the UK Independence Party's manifesto for the general election before last and for the last general election, and if he cares to read it for the next general election, he will see that that is precisely what we propose. We in the UK Independence Party think that our system of representative parliamentary democracy has broken down, which is why the people of this country are so fed up with the political classes so ably represented by the noble Lord and others on the Benches opposite.
	Yes, we want that system; we want it to be revolutionary; and we want out of this project. That is the answer to the noble Lord. There is no doubt about it. I speak for the UK Independence Party and not, of course, for my erstwhile Conservative friends. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Pearson of Rannoch: moved Amendment No. 6:
	Clause 2, page 1, line 12, after "excluding" insert—
	"(i) Article 1, paragraph 6, inserted Article 3b, paragraph 3, on the principle of subsidiarity(ii) "

Lord Pearson of Rannoch: I think that something has gone wrong with the allocation of duties in the UK Independence Party: I left my notes on this amendment in the Home Room some time ago at dinner, so I shall be brief.

Baroness Ashton of Upholland: Would the noble Lord like us to get them for him?

Lord Pearson of Rannoch: By the time the noble Baroness comes back I will have finished. This amendment simply would remove the whole bogus concept of subsidiarity from the Treaties of Rome. As Members of the Committee will know, the concept of subsidiarity was introduced at Maastricht when the unfortunate John Major was Prime Minister of this country. Mr Major returned from the Maastricht negotiations saying that he had won "game, set and match". Included in that triumph, 25 per cent of all the regulations of the European Union were going to be repatriated.
	I have another question for the Conservative Party, which was in charge at the time. How many regulations have been repealed under subsidiarity since this great negotiating triumph of Mr Major at Maastricht? I do not want to be told about how many new pieces of legislation might have come into force had it not been for subsidiarity, because it was a good influence on the legislators and they did not go along with it, I want to be told how many pieces of European legislation have actually been cancelled or repatriated. I can tell the noble Lord, Lord Howell, on the Front Bench that the answer is zero, but I would not mind if he said it.
	To understand why the principle of subsidiarity in the Treaties of Rome was never really a starter, it is worth putting on the record once again the key paragraph in the concept. It goes as follows:
	"In accordance with the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and insofar as the objectives of the intended action cannot be sufficiently achieved by the Member States"—
	either at central level or at the regional and local levels—
	"but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level".
	As usual I have to apologise for the Eurospeak, but it is worth concentrating on those words. The question that arises from the paragraph is this: who decides what is better dealt with at which local level? The answer to that is the EU.
	In the treaty we are discussing at the moment, there is a new protocol on subsidiarity. If anyone wants to read a procedure for not making a decision or for making a decision—

Baroness Ashton of Upholland: I rise just to tell the noble Lord that his notes have arrived.

Lord Pearson of Rannoch: I am extremely grateful to the Government for producing my notes, but I am too far down the gangplank to go back to where I might have started had I remembered them after dinner.
	The point is that in the new treaty there is a new protocol on the application of the principles of subsidiarity which results in disastrous decision-making. I have one serious question for the Leader of the House. In Article 4 it states that the Commission shall,
	"forward its draft legislative Acts and amended drafts to national Parliaments at the same time as to the Union legislator".
	In case noble Lords have not followed it, I think that the new Union legislator is the Council and the Parliament together. My question is this: how does COREPER come into that part of the decision? The permanent representatives committee cannot be found on the European Union website, it does not exist, and yet this is the body of permanent representatives from the nation states who meet in secret to consider proposals made in secret by the unelected Commission. Then, having done all the horse trading and swapped the fishing quotas for other things I do not care to mention, it puts the proposals to the Council of Ministers where unanimity is easily achieved. I ask therefore where COREPER comes into the process. In the end, these decisions are taken by the European Court of Justice. Article 8 of the new protocol makes it quite clear that it is our friend the ECJ, that engine of the Treaties of Rome, which makes the final decisions on whether something is subject to subsidiarity, whether it should be, should not have been, or is objected to by the national parliaments that are brought into this process in a completely meaningless fashion.
	The last question is important because the noble Lord, Lord Owen, asked earlier about the limits of the powers of the European Court of Justice in this matter. I think I pointed out in that debate that they are without limit and that there is no appeal against a judgment of the European Court of Justice. In the matter of subsidiarity and poor Mr Major's negotiation of it at Maastricht, it is worth putting on the record the letter written by Mr Major to Mr Jacques Santer—at the time the lord high executioner, or rather the President of the Commission—after Mr Major had thought at the Maastricht negotiations that the United Kingdom had escaped the protocol on social policy and particularly the 48-hour working week.
	This letter is subsidiarity and the Court of Justice in action and is worth putting on the record. I have it here. It was put in the Library on the day the Statement was made. I got it from the Library and photographed it and it was removed from the Library the next day. But it is a public document and I am not breaching any confidentiality by reading it out. It is dated 12 November 1996 and is from the Prime Minister to Mr Santer. It states:
	"Dear Jacques,
	Article 118(a) of the treaty establishing the European Community.
	My intention in agreeing to the protocol on social policy at Maastricht was to ensure that social legislation which placed unnecessary burdens on businesses and damaged competitiveness could not be imposed on the United Kingdom. The other heads of state and government also agreed that arrangement, without which there would have been no agreement at all at Maastricht".
	Note that.
	"However, in its judgment today"—
	this is part of the answer to the noble Lord, Lord Owen—
	"the European Court of Justice has ruled that the scope of Article 118(a) is much broader than the United Kingdom envisaged when the article was originally agreed as part of the Single European Act. This appears to mean that legislation which the United Kingdom had expected would be dealt with under the protocol can in fact be adopted under Article 118. That is contrary to the clear and express wishes of the United Kingdom Government and goes directly counter to the spirit of what we agreed at Maastricht. It is unacceptable and must be remedied.
	The United Kingdom will therefore table amendments in the Intergovernmental Conference to restore the position to that which the United Kingdom Government intended following the Maastricht agreement. Those amendments will be aimed at both ensuring that Article 118(a) cannot in future be used in ways contrary to the United Kingdom's expectation and dealing with the specific problem of the working time directive. I attach the utmost importance to these amendments and I shall insist that they form part of the outcome of the Intergovernmental Conference. I do not see how new agreements can be reached if earlier agreements are being undermined. Meanwhile I urge the Commission to refrain from making proposals under Article 118(a) which properly belong to the other member states' agreement on social policy. I am sending copies of this letter to the heads of state or government of the European member states".
	So that is the Court of Justice and subsidiarity in action.

Lord Lea of Crondall: Before he continues with his autobiography, does the noble Lord accept that the working time directive was always under the health and safety provisions in the old treaty and was never anything to do with the social chapter? John Major got himself into a difficulty and so that rather disingenuous letter is not worth the paper it is written on. That is the true story of that affair.

Lord Pearson of Rannoch: I was not around at the time. All I can say is that the Prime Minister of the day wrote this letter, which is presumably not unimportant.

Lord Forsyth of Drumlean: I was around at the time and I was sent to the European Social Council meetings to delay implementation. The noble Lord is right to say that it was introduced as a health and safety measure because that required a qualified majority vote, whereas if it was dealt with as an employment measure it required unanimity.
	The noble Lord has been rather rude about John Major but he should give him a little credit because he secured not only the opt-out from the social chapter, which this Government gave away on their election in 1997, but he also secured an opt-out on the single currency. That is why we are not in the single currency. Given his views, the noble Lord ought to be a little more polite about the previous Prime Minister.

Lord Pearson of Rannoch: I will do my best to be more generous. Does the noble Lord, Lord Kinnock, have something to say from a sedentary position?

Lord Kinnock: I will happily intervene to reflect upon the opt-out from the single currency. Witness the exchange rates at this moment: it is scarcely the puny invention that has been described elsewhere. The noble Lord may want to comment on that.
	Is the noble Lord actually asserting that efforts to regulate the way work is conducted have no implications either for the operation of a market or for the achievement of satisfactory standards of health and safety that affect not only workers but the public with whom they work? I have in mind, for instance, transport. If that is what he is asserting, the noble Lord will have to take it up with the factory Acts, not with the European Union.

Lord Pearson of Rannoch: I was about to try to be nice to Mr Major. I simply say to my noble friend Lord Forsyth that I think Mr Major should have vetoed the whole social policy chapter and the project of the European currency.
	I say to the noble Lord, Lord Kinnock, that if we were not in this project of European integration we would be able to decide all these matters for ourselves and not have to go along with, and be outvoted by, a large number of nations. We have much in common with those nations and can collaborate with them over many things, but we do not want to be in this unfortunate project of European union.
	That takes me back to where I started: subsidiarity, and why it does not work. It is also an answer to the noble Lord, Lord Owen; it is as well to have it on the record. If he wants to know what the limits are of the European Court, the answer is that there are none. It has always advanced the project of European integration and it will continue to do so. The quicker we get out of the whole thing, the better. I beg to move.

Lord Williamson of Horton: More in sorrow than in anger, I come to this amendment. I am, frankly, surprised that the noble Lord, Lord Pearson, has chosen this subject to exclude from the coverage of the legislation that we are now looking at. When the noble Lord read out the extract from the text, I realised that under the rules of this House it is not considered correct to applaud, but I felt tempted to applaud that text. First, it seems to be highly valuable to the United Kingdom, and, secondly, it is an anti-centralisation measure. That is why I am sure the noble Lord, Lord Howell of Guildford, will not support the amendment, because it goes in the direction that he has favoured.
	When we turn to the purpose of the subsidiarity clauses that exist now and are repeated here, and which were quoted, we should recall that they did not exist some years ago. When we entered the Community, they were not there. It was one of the faults of the Community that there was a centralising tendency. There was no recognition that a number of things could be better done at national level, and that the things that were to be done at Community or Union level were those that were better done for specific reasons at that level. That was an important step forward and one that in the United Kingdom we should welcome now, just as we welcomed it at the time.
	Furthermore, it is not correct to interpret this part of the text as if it had no application to the work of the Council and the Commission. That is where it has application. This shows that where the Council takes decisions, it should bear in mind the principle of subsidiarity. The Commission also should do that in presenting proposals. It may well be that we are not satisfied that the Commission has always gone as far as it should go in respecting the principle of subsidiarity, but that is not a reason to attack the basic proposal that we are discussing now.

Lord Radice: Does not the European Court of Justice also have to take account of that principle of subsidiarity as an interpreter of the treaties?

Lord Williamson of Horton: Yes, I think that is the case. I stress that, while we may not always be satisfied with the way in which the principle of subsidiarity is operated, it is none the less a very valuable principle which goes in our interest. The proposal on the table from the noble Lord, Lord Pearson of Rannoch, would delete the lot. It would delete not only the bit about the national parliaments but everything about subsidiarity. He explained that he would be quite happy to see subsidiarity go because he would like to see the whole thing go. We all know that the noble Lord, Lord Pearson of Rannoch—if I may use a Scottish phrase—has the mulligrubs about the European Union. I am sure that Hansard will have the pleasure of recording that phrase for the first time. It means to grumble and grumble and grumble. It is a very useful phrase which our Scottish colleagues have used in the past and is very appropriate for the interventions—

Earl Ferrers: Will the noble Lord be good enough to repeat that, because some of us Sassenachs do not quite understand it?

Lord Williamson of Horton: The phrase "he has the mulligrubs" means that he continues to grumble and grumble and grumble, which in the case of the noble Lord is true. He does not like the European Union and he continues to grumble. He has applied that to a part of the treaty which is not appropriate for either a grumble or deletion; it is a part of the treaty which we should preserve. The amendment is not a neutral point, but an attack on something which is of value to us as a nation. So I reject the amendment and hope that we shall retain this part of the treaty without amendment.

Lord Tomlinson: I say more in sorrow than in anger to my noble friend the Leader of the House that if ever she sends our mutual noble friend Lady Farrington to recover the notes of the noble Lord, Lord Pearson of Rannoch, and subject us again to that tirade that we heard in consequence, my support for her leadership cannot be taken as guaranteed.
	However, there were in what the noble Lord, Lord Pearson, said one or two nuggets that are worth pursuing. One of them was pursued very effectively by the noble Lord, Lord Williamson, and related to the positive nature of that letter which Mr John Major wrote. If one really wants to have a go at John Major, one should have a go at him for the Edinburgh summit, at which he was so lackadaisical that he allowed his signature to be appended to a decision which bound us legally to having 12 sessions of the European Parliament in Strasbourg at great expense to the taxpayer and at great detriment to the European Parliament's effectiveness.
	However, I say that as an aside. I wanted to help the noble Lord, Lord Pearson, with his concern about the integrity of the European Court of Justice. Following the injunction from my noble friend the Leader of the House by quoting only from good House of Lords sources, I point out to him that paragraph 121 of the report of the Constitution Committee of your Lordships' House contains a clear quotation from Professor Alan Dashwood, who gave evidence to it. He said that he was,
	"not aware of changes envisaged by the [Lisbon Treaty] that would significantly alter the existing relationship between UK courts and the European judicature, which has always been a model of cooperation and mutual respect".
	I am sure that it pacifies the noble Lord, Lord Pearson of Rannoch, that that is the judgment of so distinguished a jurist as Professor Dashwood. I will not labour the point before the Committee; the noble Lord can read on himself in paragraphs 122, 123 and 124, which contain the conclusions of the Constitution Committee.

Baroness Ludford: I start by seconding what the noble Lord, Lord Tomlinson, said about John Major and Strasbourg, as someone who is on the 7 am flight to Strasbourg tomorrow morning and is doing the shuttle twice this week. I must add to the criticisms of Tony Blair, who allowed the protocol to be enshrined in the treaty of Amsterdam in 1997. Unfortunately, we cannot vote on our own seat, which is disgraceful.
	I also felt that the noble Baroness, Lady Farrington, who had our thanks for her mercy mission for the noble Lord, Lord Pearson of Rannoch, must have dropped the papers and jumbled them up before she delivered them to the noble Lord, because I was a bit confused as to why we went via social policy and all around the highways and byways in talking about subsidiarity. Like the noble Lord, Lord Williamson, I am completely mystified as to the motives of the movers of this amendment. I accept that the noble Lord, Lord Pearson, wants to be out of the EU altogether but, since he cannot achieve that this evening, I should have thought that the provisions on subsidiarity and the strengthening and reinforcement of those provisions in the treaty of Lisbon were right up his street. I, and I believe others on these Benches, would strongly welcome that reinforcement, and the associated strengthened role through the two protocols of national parliaments in monitoring respect for subsidiarity.
	A principal objective of the Lisbon treaty is to strengthen the democratic element in the EU, which means enhancing the powers of the European Parliament and boosting the participation of national parliaments. The noble Lord, Lord Pearson of Rannoch, referred to the demand from the British people that their laws should be decided by the people whom they have elected. That is absolutely right—but those laws are decided by national Ministers and directly elected MEPs. The increase in the role of national parliaments will strengthen that element. National parliaments will be sent draft legislation direct from Brussels and the Commission; it is not mediated or filtered through national Governments. That is important.
	There is a role for national parliaments in ensuring compliance with subsidiarity, and especially a very strong role with regard to freedom, security, justice and home affairs—which happens to be my speciality. We have benefited a great deal on the Civil Liberties, Justice and Home Affairs Committee in the European Parliament, from the increasing number of meetings that we have had with representatives of national parliaments, not least from this house. The noble Lord, Lord Wright of Richmond, is not here, but I pay tribute to him for the strong role that he took in that liaison and partnership function. We will have to do more of that.
	The EU Committee's report on the impact of the treaty of Lisbon rightly makes the point that although eight weeks is better than the six weeks that is in the treaties at the moment for the response from national parliaments, it is still not an awfully long time. One of the needs will be for national parliaments to get their response in upstream, to get in early. A close relationship between Members of the European Parliament and their counterparts in national parliaments will be essential to doing that. That is particularly necessary with a tendency to First Reading deals. I was rapporteur on a First Reading deal last year and I am very conscious of the criticisms and the need for more transparency in First Reading agreements.
	There will be every motive for us all to work together in interparliamentary co-operation among the national parliaments, and between them and the European Parliament, with a particularly strong role on things like monitoring and scrutiny of Europol, Eurojust and other functions in the justice and home affairs area.
	The orange and yellow card arrangements strengthen the scrutiny function of national parliaments. Some wanted a red card. That was not achieved. But that is to confuse the roles of the national and the European Parliaments. It is a pity that the orange card only covers Commission proposals, which apparently is an oversight since member state proposals often need a great deal of scrutiny.
	I end on a point made earlier by the noble Lord, Lord Howell. National parliaments will have to streamline and enhance their machinery to input both to the Brussels system and with national Governments. That is far from being achieved in this Parliament at Westminster.

Lord Brooke of Sutton Mandeville: I state instantly that I rise purely out of self-interest. I did not speak at Second Reading. I listened to two-thirds of the debate, and I have sat through the entire proceedings today without speaking. I realise that if I do not utter anything I shall not be allowed to be on the copy list of the billets-doux of the Lord President to the noble Lord, Lord Pearson. Consequently, I simply wish to establish my place in the queue.
	I want to do one other thing. It is now more than 20 years since I gave up being the British Minister on the Budget Council—I served for four years in that position, which I greatly enjoyed. I wish to pay a considerable tribute to the work of COREPER, which, however mysterious it is to the noble Lord, Lord Pearson, is reasonably well known to everybody else. The Budget Council was incapable of making a decision until dawn. Had COREPER not reduced the size of the agenda before we arrived, we would not have made a decision until dawn the next day—and the quality of the decisions you make recedes as time goes on. On that basis I will sit down.

Lord Willoughby de Broke: I was interested in what the noble Baroness, Lady Ludford, and the noble Lord, Lord Williamson, said on increasing the power of national parliaments. It is simply not happening; it is just window dressing.
	I draw the Chamber's attention to what the treaty says on national parliaments. It says:
	"Where reasoned opinion on a draft legislative act's non-compliance with the principle of subsidiarity represent at least one third of all the votes allocated to national Parliaments in accordance with",
	various requirements; it continues,
	"the draft must be reviewed".
	That is fine. It goes on:
	"After such review, the Commission or ... the group of Member States...the Court of Justice, the European Central Bank or the European Investment Bank"—
	or whoever it is—
	"may decide to maintain, amend or withdraw the draft".
	Reasons must be given for that. So actually it is business as usual. They do not have to do anything about it at all. National Parliaments can say exactly what they want. We have to get one-third of all national parliaments to agree to do this. The Commission can then decide to maintain the proposal anyway. How does that possibly increase the power of national parliaments? The answer is that it does not, so I hope that we will not hear any more about subsidiarity increasing the power of national parliaments.
	That bit was in the earlier Maastricht and Nice treaties. The new treaty says that under the ordinary legislative procedure—I will not read the whole thing, it is too boring—half of national Parliaments would have to get together. They can then put a reasoned objection to the Commission. Yet again the Commission may decide to maintain, amend or withdraw the draft.
	Even assuming that you can get half the national parliaments to consider the proposal—a proposal that has already of course been signed up to by the relevant Government—there is absolutely zero chance of anything happening at all. There is no further power to national parliaments whatever.
	I hope that whatever else comes out of this brief discussion on the amendment of my noble friend Lord Pearson, the measure cannot possibly be construed as giving more power to national parliaments. It simply is not the case. It is damaging to national parliaments and to the European Union—although I do not really mind it damaging the latter body—because it gives the impression of accountability without the reality of accountability. It is selling the pass doing this. Therefore, I strongly support the amendment of my noble friend.

Lord Hunt of Wirral: I oppose this amendment. Listening to the noble Lord, Lord Pearson of Rannoch, I was reminded of the closing lines of act 3, scene iii of Hamlet where King Claudius rises and says:
	"My words fly up, my thoughts remain below.Words without thoughts never to heaven go".
	But the amendment gives us a chance to probe the meaning of "subsidiarity". As many noble Lords know, including the noble Lords, Lord Williamson and Lord Tomlinson, and the noble Baroness, Lady Ludford, the problem is that this term arose in a completely different context to the one in which it is now used by the European Union. I know that it is said to date back to Aristotle and it has references in the works of Locke and John Stuart Mill but it really arises from the need of the Catholic Church to uphold its authority in a time of rising political tension, particularly in the late 19th century. The trouble is that we do not really know what it means. We have tried to define it many times—it means taking decisions at the lowest appropriate level. But even when definitions establish a presumption in favour of the national level of decision-making, they still leave scope for political and judicial argument about exactly where it fits. I hope that the Minister will assist us on this. As far as we are concerned, this yellow card, which sounds like a forceful sanction, has no referee to exercise it or to demonstrate it—as happened in tonight's match of Liverpool versus Chelsea. When I last heard, Liverpool was winning 1-0. But even when you have a referee to flag it up it has little effect. We need a red card.
	I repeat what William Hague said in the other place. He reminded us that:
	"The German constitutional court described the provision last week as ineffective and impractical".—[Official Report, Commons, 26/2/08; col. 952.]
	Will the Lord President prove that wrong and reassure us?

Baroness Ashton of Upholland: I am grateful for the challenge that has been laid down. Unfortunately, I cannot think of any literary works to refer to. I offer sincere apologies to my noble friend Lord Tomlinson for my momentary lapse of generosity in getting the relevant papers for the noble Lord. It will not happen again.

Lord Pearson of Rannoch: I thought that I had made it clear that I was not able to use them.

Baroness Ashton of Upholland: I shall not prolong this as the hour is late and noble Lords wish to go. I shall of course ensure that the noble Lord, Lord Brooke, gets all the billets-doux. I normally note who is in the Chamber so we shall ensure that noble Lords get copies of all the relevant material. I am noted for giving people too much paper rather than too little.
	The noble Lord, Lord Hunt, rightly gets to the heart of the matter—what is it that we are trying to describe in this principle. I did not know the background with regard to the Catholic Church. I was grateful for that information and I shall read up on the matter. Certainly it is not a word that trips lightly off the tongue in terms of explanation. The noble Lord is right; traditionally we have looked at it in the context of saying that you devolve down to the lowest possible level where decisions should rightly be made. I put it a different way in saying that the European Union should and must undertake only action which is better achieved at Union rather than national, regional or local level. That is where it can add value. If it cannot do that, it should not undertake that action. Because this principle needs to be probed, prodded, looked at, examined and questioned, it is important that the mechanisms exist for that.
	Members of the Committee will know too that we have successfully invoked subsidiarity on a number of occasions; for example, in 2003 on taxation, where we argued that a Commission proposal to abolish the UK's VAT zero rates on food, children's clothes and so on was inconsistent with subsidiarity. In 2006, following a Commission report to determine what was needed next on labour law, the UK successfully argued that no new EU-level legislation was necessary.
	As noble Lords have pointed out, in particular the noble Baroness, Lady Ludford, we have now given national parliaments for the first time direct powers enforcing the principles of subsidiarity. We accept too that what will be important about that is how we make sure that they actually work. I referred earlier to my conversations with Catherine Day at the Commission the week before last. I know that she was very concerned to think about the broader dialogue that the Commission can have with national parliaments beyond the treaty; in other words to be able to engage quickly and to engage parliaments at the Green Paper stage of Commission thinking, which is something that they are obviously clearly interested in and involved with, and something that I very much encouraged them to do. As well as the formal mechanisms described of orange and yellow cards, having a dialogue that informs the Commission's policy-making process would be just as important, because those informal dialogues, in the sense that they are not formally in the treaty but are formal in terms of making sure that they take place, would be very important in so doing.
	We have talked about the eight-week timetable, which is an improvement on what has been proposed before. During that time, nothing can be placed on the provisional Council agenda, so nothing can be prepared while that process is going on, which is an area that noble Lords will be concerned with. I agree with what the noble Lord, Lord Brooke, said about COREPER. When I was in Brussels 10 days ago, our permanent representative was hotfoot from several extremely long COREPER meetings, and that is certainly what I recall from being involved with the justice council.
	It is worth bearing in mind, for those who are not familiar with the process, that if you are a Minister attending from 27 states, you fly in for the meetings. Noble Lords opposite will remember well that you are well briefed, but you have not had time to have the detailed discussion. The work that goes on in COREPER is completely invaluable. What will happen post the ratification of the treaty is that all proposals for legislation will go through COREPER. Noble Lords know the work that it does in preparing for the Council, together with the European Parliament, which is the legislator, as the noble Lord, Lord Pearson, mentioned. Article 240 of the TFEU sets out with minor changes what have been the long-standing provisions on the way in which COREPER works. As I said, I agree with those who paid tribute to it.
	Again, we find ourselves very quickly into the role of the European Court of Justice. My noble friend Lord Radice said it very well when he said that the role of the European Court of Justice is to interpret the treaties. By definition, its role is described and proscribed by that; by the treaties that the member states agree. It is a creation of the treaties; it is not superior to the treaties. Its job is to interpret the legislation that is decided by the Council or, where co-decision applies, by the European Parliament as well.

Lord Forsyth of Drumlean: Can the Minister deal with one point made by the noble Lord, which is about the role of the European Court particularly in respect of the working-time directive? It was brought forward as a health and safety measure, and the Government of the day appealed on the grounds that it was not a health and safety measure. I remember being told at the time that because the European Court had a duty to promote the acquis, that meant that there would be a move towards integration and towards furthering those powers and that therefore our chances of success were limited. Would she like to comment on that?

Baroness Ashton of Upholland: I cannot comment on the specifics of the working-time directive, because I do not have the details at my fingertips. The point about the promotion of the acquis, as I interpret it—which is the body of law—is that if you accept that the role of the European Court of Justice is to interpret what has been determined in the treaties, and that within that it has a role and responsibility that those member states operating together which agree what is to happen and agree the legislation—the treaties—then the European Court of Justice will play a role in interpreting the acquis.
	The noble Lord used the word "promote". It is an interesting word—like subsidiarity, it has many meanings, depending on how one looks at it. But I am quite clear that the role of the European Court of Justice is to interpret and examine cases that are brought before it. As we can discuss at greater length when we debate the European Court of Justice, we have been successful in arguing our point when we bring cases before it. We bring those cases before the court so that it can look at the legislation and the interpretation thereof. In addition, we have four judges involved with the European Court of Justice—no member state has more.
	I hope that I have answered sufficiently for one night—it is after 10, and I promised noble Lords that we would try not to run late. We have had a good first day but a slow one. The noble Lord, Lord Pearson, looks as if he is about to leap to his feet—to withdraw his amendment, I trust. It is great to see him enjoying himself so much.

Lord Pearson of Rannoch: I think it is normal for the mover of an amendment to reply at the end of the Minister's response, as quickly as possible. The noble Lord, Lord Williamson, and other Members of the Committee have extolled the value of subsidiarity but not one has answered my question about any single piece of European legislation being withdrawn as a result of subsidiarity. Those of us who have put our name to the amendment maintain our position that the thing is useless and should be taken out of the treaties.
	We were not impressed—and neither, I was glad to see, was the noble Lord, Lord, Hunt—by the system of yellow and orange cards. We agree with the German constitutional court that all those footballing metaphors are ineffective and impractical.
	I will ask and answer my next question, because we are in a hurry. Is there any possibility under subsidiarity and under the new protocol of the acquis communautaire being reversed by the Luxembourg Court of Justice? The answer is no. Nothing will be reversed—the ratchet will continue to grind towards the ever-closer union of the peoples of Europe, required by the treaties. We will continue to be cursed with legislation from Brussels about which the House of Commons and your Lordships' House can do nothing. I refer to the ladders directive, which means that you can no longer climb a ladder unless someone is holding the bottom—very good for our building trade. The food supplements directive, which is going through now, will control the amount of vitamins we can eat. Then there are the directives on the height of rocking horses in the nursery and on light bulbs—very important. These directives all come from Brussels—subsidiarity is nothing. Generally speaking, the nooks and crannies of our national private life, which we were assured at Maastricht would no longer continue to be invaded, will go on being invaded by the vibration directive and the 50-page directive on the manufacture of condoms. There is no hope for subsidiarity and no hope for this project. With those thoughts, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bach: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at 10.09 pm